Pre-Nuptial Agreements

Pre-Nuptial Agreements

Marriage comes not only with emotional attachment but also financial implications, and it is important to consider these before getting married.

What is a Pre-Nuptial Agreement?

Pre-Nuptial Agreements are entered into ahead of a marriage or civil partnership to illustrate what the parties intend to happen to their money and property if the relationship was to end.

A Pre-Nuptial Agreement typically defines the separate and joint assets of spouses and sets out how those respective assets will be divided in the event of a divorce.

Why enter into a Pre-Nuptial Agreement?

There are many reasons why people choose to enter into a Pre-Nuptial Agreement, for example:

  • One party has substantially greater capital or income than the other;
  • One or both of the parties wish to protect assets they owned prior to the marriage;
  • In order to define what is considered to be “matrimonial property” or “non-matrimonial property” i.e. in relation to business assets owned by one party prior to the marriage;
  • One or both of the parties has a connection with, or property in, another jurisdiction.

Are Pre-Nuptial Agreements binding?

Whilst not strictly binding in England and Wales, Pre-Nuptial Agreements are used as a persuasive tool to portray the intentions of the parties in the event of the breakdown of the marriage. The general rule for Pre-Nuptial Agreements is that:

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.

There are various factors that can illustrate to the Court that that the agreement fairly reflects the actual intentions of the parties. These include:

  • Each party setting out details of their financial position – this ensures that each party is aware of the full financial position of the other and can then make an informed decision as to whether to enter into the agreement;
  • Independent legal advice is provided to both parties on the agreement and its effects – it is imperative that the parties understand the terms of the agreement;
  • Regular review of the agreement during the course of the marriage or civil partnership at regular intervals and at upon key events i.e. the birth of a child.

It is advised that an agreement should be entered into 28 days before the marriage or civil partnership to avoid either party asserting arguments of undue pressure. However, in practice, finalising the agreement can take much longer, so it is advisable to plan well ahead if a Pre-Nuptial Agreement is likely to be of interest to you.

It is important to note that a Pre-Nuptial Agreement cannot prevent the Court from considering financial issues upon a later divorce, for which they are obliged to consider the factors set out in section 25 Matrimonial Causes Act 1973.

Recent case law illustrates the Court’s approach to Pre-Nuptial Agreements, some of which have been upheld whilst others have not, therefore it is of utmost importance to properly draft the agreements to give them the greatest chance of being upheld.

For example, in the case of Luckwell [2014] the husband had no assets of his own and the principal asset was the former matrimonial home which had been given to the wife by her father. The Judge in this case took the view that the Pre-Nuptial Agreement was highly relevant as legal advice had been obtained by both parties. In light of the husband’s lack of assets, the Judge granted an award to the husband to purchase a property, but did try to uphold the contents of the agreement as far as possible.

However, in the case of Veersteegh v Veersteegh [2018] the Pre-Nuptial Agreement that was signed by the wife the day before the wedding was upheld, even though the wife didn’t read the agreement or obtain legal advice. She thought that the proposed agreement would cover only non-marital assets derived from the husband’s family. The reason for upholding, was due to the fact that the wife already had assets the value of which comfortably exceeded her needs.

The topic of Pre-Nuptial Agreements is constantly being tested and evolving. Serious consideration should be given to the protection of pre-acquired assets prior to entering into a marriage.

If you would like further information on the contents of this article or on Pre-Nuptial Agreements in general, please contact Jolene Hutchison on 01494 478 603 or at jfh@blasermills.co.uk.