Pre-Nuptial Agreements, the Do’s and Don’t’s

Pre-Nuptial Agreements, the Do’s and Don’t’s*

*The information in this blog relates to England and Wales only

Why should you consider a Pre-nuptial Agreement?

According to the Office for National Statistics, 42% of marriages in England Wales end in divorce.

What is Pre-nuptial Agreement?

A Pre-nuptial Agreement is a legal document that is drawn up between two parties, prior to a marriage. It sets out how assets and income will be divided in the event of a marital breakdown. Pre- nuptial Agreements must be drafted and executed prior to the marriage.

When is a Pre-nuptial Agreement Appropriate?

A Pre-nuptial Agreement is appropriate when there is a disparity between the parties’ assets and/or income, for example where one party is a high earner, where there is family wealth or where parties wish to protect assets for children from previous relationships or marriages.

Are Pre-nuptial Agreements legally binding in England and Wales?

Pre-nuptial agreements are not strictly legally binding in England and Wales, despite being valid in many European countries as well as Canada, Australia, and the USA.

However importantly, Pre-nuptial Agreements are persuasive to the Court and in the case of Radmacher v Granatino [2010] UKSC 42, the Supreme Court said:

“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”

In this case the Court upheld the Pre-nuptial Agreement to protect the wife’s pre-marital wealth, but it was varied to meet the financial needs of the children.

In the more recent case of MN v AN [2023] EWHC 613 (Fam) Mr Justice Moor’s judgment reinforces the position that valid prenups will be upheld by the court of England & Wales.

How to ensure that a Pre-nuptial Agreement will be upheld

The Court has clarified that both parties to a Pre-nuptial Agreement should take independent legal advice. In Radmacher v Granatino [2010] UKSC 42, the Court clarified that

“In most cases it is necessary and in every case it is desirable that the party against whose claim a Prenuptial contract is raised should have received independent legal advice prior to entry into it. Why so? Because proof of receipt of independent legal advice is often the only, and always the simplest way of demonstrating that party entered into it knowingly….”

Further any Pre-nuptial Agreement must be in a form of a Deed, which means that the document must be in writing, the parties to the Deed must sign it before witnesses and it must be intended to be a Deed, be delivered and be dated.

Both parties to a Pre-nuptial Agreement should provide full financial disclosure. This is generally interpreted as both parties having sufficient information to make an informed decision as to the other’s financial circumstances and to enter into a Pre-nuptial Agreement with a full understanding of its implications.

The terms of the Pre-nuptial Agreement should be substantially fair, for example the agreement should provide for each party’s basic needs to be met and those of the children of the family in the event of a divorce. If any assets are to be ring fenced from any division upon divorce, these should be clearly defined within the Pre-nuptial Agreement.

If there are international assets, advice must be sought from the relevant country and any jurisdictional issues should be determined.

Neither party felt pressurised by the other party to enter into the agreement i.e., there should be no undue influence, duress or fraud, otherwise the agreement will be void. The Pre-nuptial Agreement must be signed no later than 28 days before the wedding and ideally several months prior.

And finally, the Pre-nuptial Agreement should be reviewed every 3-5 years or when a significant event occurs to ensure it remains fair and relevant for the parties and their circumstances.

What to include in a Pre-Nuptial Agreements?

It is important to establish what would happen to the parties’ assets and how they would be divided, this includes properties, inherited assets, pre-marital assets, trust interests, cash savings, business interests and investments, as well as personal belongings, pensions, debts, and spousal maintenance provisions.

When will a Pre-nuptial Agreement or terms within it, be disregarded?

The Court will not uphold any clause within a Pre-nuptial Agreement which is deemed to be unreasonable or unfair.

The Court will always have jurisdiction in the event of a divorce. If one party no longer wishes to adhere to the terms of the Pre-nuptial Agreement, finances may still have to be determined by the Court.

Circumstances can change, and in the event of a dispute, the Court will look at your circumstances as they are at the time of divorce, not when the agreement was made. What may have been fair at the time of the agreement might not be considered fair if the parties’ circumstances have changed significantly.

If you need advice on child contact or any other family law matters in England and Wales, please contact Sharan at Gilson Gray for a confidential discussion.

The information and opinions contained in this blog are for information only.  They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice.  Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.