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Why have a pre-nuptial agreement?

A pre-nuptial agreement (also known as a pre-nup) is an increasingly common aspect of family law, that are used for a variety of reasons.

Maybe to ensure the parties’ assets remain theirs if the marriage fails.

Maybe to ensure that a family business remains in the family.

To provide that one person’s assets, or at least a large proportion of them, go to the children in the event of their death.

To clearly define matters which may become an issue after the marriage.

Where there is a substantial disparity of wealth, it may be the parties’ intention that this disparity be preserved rather than run the risk that in future divorce proceedings the assets are divided by a Judge and not as the parties initially intended.

Pre-nuptial agreements have been legal in many states of the United States for many years and now in many European countries such as France and Germany. In Australia pre-nuptial agreements are commonplace.

What do pre-nuptial agreements cover?

Pre-nuptial agreements can cover the division of all property, determine ownership of property, arrange for a person to occupy a home, and on what basis, they can deal with a responsibility for debt and payment of outgoings.

The Divorce Reform Act 1969, shortly followed by the Matrimonial Causes Act 1973, profoundly reformed the division of capital and income on divorce.  Now, 38 years later, there are many aspects of the law in relation to divorce proceedings and division of the matrimonial assets that, some may say, are in need of reform.

Years ago, pre-nuptial agreements were not given any legal weight; however, the recent Judgment of Baron J. in MA -v- MA 2006 EWHC 2900(FAM 2007 1 FOR 1760) the Judge stated “It is accepted that an agreement entered into between husband and wife does not oust the jurisdiction of this Court.  For many years, agreements between spouses were considered void for public policy reasons, but this is no longer the case.  In fact, over the years, pre-nuptial “contracts” have become increasingly commonplace and are, I accept, much more likely to be accepted by these Courts as governing what should occur between the parties when the prospective marriage comes to an end”.

You can see, therefore, that the Courts are looking more and more favourably at pre-nuptial agreements.

In 1999 the Government issued a green paper “Supporting Families” promoting pre-nuptial agreements and suggesting legislation which could make them binding.  Whilst no legislation has been forthcoming, the paper set out circumstances in which a pre-nuptial agreement would not be legally binding:-

  • A pre-nuptial agreement is not likely to be binding, therefore, where there is a child of the family
  • Where under the general law of contract the agreement would be unenforceable
  • Where one of both of the couple did not receive independent legal advice before entering into the agreement
  • Where the Court considers the enforcement of the agreement would cause significant injustice
  • Where one or both of the couple have failed to give full disclosure of the assets and property before the agreement was made
  • Where the agreement is made fewer than 21 days prior to the marriage

How will a Court view a pre-nuptial agreeement in the case of a divorce?

The position in Court now is as follows.  When looking at how to divide the matrimonial assets the Court will consider all the circumstances of the case and first consideration to the welfare of any child of the family whilst under the age of 18.

The Court’s duty is to achieve fairness.

The Court can look at the pre-nuptial agreement as part of the circumstances of the case.

The Court will consider whether both parties received independent legal advice.

The Court will want to make sure that both parties understood the advice and the terms of the pre-nuptial agreement and were willing to sign it without any pressure.

The Court will want to make sure that the agreement was made more than 21 days prior to the marriage.

The pre-nuptial agreement should provide for any children of the family and have provision for future children born after the agreement.

The Court will want to see that both parties provide full disclosure of their financial circumstances to the other party.

The Court will then consider the above issues and apply fairness in all the circumstances of the case, giving first consideration to the welfare of any children.

Much will depend on the individual facts of the case; however, recent case law has shown that Courts are more and more willing to consider pre-nuptial agreements when making decisions with regard to the division of the matrimonial assets.

If you need any help or assistance in this regard, please contact us here

To learn more about the range of services we offer related to Family Law, please consult the pages below:

Children matters

Divorce Financial Settlements

Domestic Violence & Abuse

New Relationships

Relationship Breakdown

 

 

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