Pre-Nuptial Agreements: unromantic and unnecessary or realistic and pragmatic?
Pre-nuptial agreements are arrangements entered into by two individuals in advance of marriage to manage, amongst other things, the way their property will be owned should the marriage breakdown.
Marriages are relationships traditionally based on trust, a willingness to share and the expectation that the relationship is secure and destined to last. However, as of November 2015 an estimated 42% of all marriages in the UK ended in divorce. Is it therefore really unreasonable to protect the property you bring into the marriage at the very outset, before the wedding festivities have even commenced?
Pre-weds in the United Kingdom may wish to consider entering into such an agreement if they have substantial wealth in their sole names they want to ring fence for themselves in the event of breakdown of the marriage, or children from previous relationships they want to pass their own property to under a Will.
However, as the law currently stands, there in no guarantee that divorce courts will abide by the terms of a pre-nuptial agreement when deciding how property should be divided during divorce proceedings. The agreement is only one of many factors a court will take into account.
English courts are inclined to give weight to non-financial contributions spouses make to matrimonial property when deciding on ownership, regardless of who owned the property prior to marriage. At present, there is no guarantee that a pre-nuptial agreement will prevent a court doing this. In the House of Lords judgement White v White (2000) Lord Nicholls emphasised that a spouse may acquire a beneficial interest if they had brought up children, made material improvements to a property or contributed in other non-financial ways. The key case in this area (Radmacher v Granatio (2010)), however did indicate that courts would now consider pre-nuptial agreements in divorce settlements, therefore going some way to provide protection for property owned in a person’s sole name.
The legal profession has traditionally been cautious to give significant weight to pre-nuptial agreements on the basis that, by specifying what would happen upon marital breakdown, such agreements facilitate the disintegration of marriages (the ‘public policy’ argument as put forward by Lord Philips in the Radmacher case). The tide is however changing. A Law Commission report, which followed the Radmacher judgement, highlighted three key reasons as to why pre-nuptial agreements should be made binding:-
Pre-nuptial agreements create certainty for both parties to a marriage as to who owns what, certainty which may prevent disputes and divorce proceedings arising in the first place.
Couples should be free to enter into a binding agreement if they so wish. For a court to deny full effect to such an agreement is to undermine freedom of choice for both parties.
The international dimension – spouses often come from different countries with different legal systems. It is possible that one party will come from a country where pre-nuptial agreements are binding. A Belgian or French national for example may expect a pre-nuptial agreement they have entered into in the UK, or in another country, to have automatic effect. The agreement will however be entirely governed by English law if it is heard in the context of English divorce proceedings. This means that there is no guarantee that an English court will give effect to the agreement, regardless of where it is drafted or the nationality of the parties to it.
Although not guaranteed to have effect, there are clear merits of a pre-nuptial agreement if you have significant assets in your sole name which you would like to ring fence for yourself upon separation, or children from a previous marriage you would like to inherit from you. Such agreements for you may be a realistic and pragmatic choice.
