Pre-Nuptial Agreements-Making it Legal?

March 2014

A pre-nuptial agreement is a contract entered into by parties before marriage used as a mechanism for stating how assets should be divided and liabilities should be repaid if the marriage fails and divorce proceedings arise. 

The Law Commission is reviewing the law in relation to the enforceability of such agreements and are seeking to decide whether “qualifying pre-nuptial agreements” should become binding in English law.  

Presently, a pre-nuptial agreement is not binding in English law and Judges have a wide discretion when deciding how to divide assets upon divorce. This discretion can often create uncertainty for divorcing couples and is in stark contrast to the law of other countries. 

Contrary to this, in October 2010 the Supreme Court heard the case of Radmacher v Granatino and upheld the terms of a pre-nuptial agreement entered into by the parties prior to their marriage. It was held that it was fair to uphold a pre-nuptial agreement as it has been properly executed and there were no factors which rendered it unfair to hold the husband to the terms of the agreement.     

Following this, there has been a move towards the possibility of upholding the terms of such agreements in divorce cases and using them as legally binding and enforceable contracts as opposed to persuasive evidence. This is because it is widely considered that parties to a pre-nuptial agreement should be free to decide between themselves how to split their assets on divorce as opposed to having a Judge deciding for them.

On 27th February 2014 the Law Commission published their final report setting out recommendations for legal change in which they recommended the introduction of “qualified nuptial agreements” which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution.  Certain safeguards would have to be met for an agreement to be binding and the Law Commission proposed that the parties would not be able to avoid meeting the financial needs of each other or any children.

It is likely that if pre-nuptial agreements are to be enforceable, parties seeking to rely upon them will have to show that they have taken independent legal advice in relation to the terms based upon exchange of financial disclosure and that the document has been properly drafted and executed between them. If this can be shown, it will be unlikely that a Judge will be able to interfere with the terms of a pre-nuptial agreement that has been “qualified”.    

Pre-nuptial agreements can be deemed unromantic but many believe making them binding will give parties control over the division of assets upon divorce and will make the outcome of their settlement more predictable and in line with their wishes.

Please visit the family services page for more details about our fixed fees for divorce and family services and the fees involved in more complex cases. Our team are always happy to discuss these with you in more detail.