Pre-nuptial agreements - September 07
Pre-nuptial agreements may not be seen as the most romantic gesture before the big day but Rickerbys’ Family Team are finding that they are increasingly being asked to provide advice on and draft such documents. Whilst they are often only associated with the very wealthy and celebrities, pre-nuptial agreements are also popular with those who are marrying for a second time and wish to try and protect the assets they are bringing into that relationship.
But are they worth the paper they are written on?
The law of England and Wales still states that pre-nuptial agreements are unenforceable. The Court is not therefore bound to follow the terms of the agreement or hold the couple to the same. However, a number of cases have shown that the Courts are recognising the increased use of pre-nuptial agreements and that society has developed since it was held 1929 that such agreements were contrary to public policy.
The Law Society’s Family Law Committee published a paper in 1991 setting out three essential features of pre-nuptial agreements. Before entering into the agreement the couple should have independent advice, secondly there should be mutual financial disclosure and thirdly, the agreement should be subject to periodic review. It was also suggested that there should be sufficient time between the agreement and the marriage to allow the couple to have time to consider and reflect upon its terms and to also take legal advice.
These suggestions were taken up in 1998 in a Green Paper called “Supporting Families” in which it was proposed that pre-nuptial agreements could be enforceable if they were signed more than 21 days before the marriage, there were no children alive at the time and full disclosure was made by both parties.
As recently as the beginning of July, a Labour MP proposed a Bill on Pre-nuptial Agreements which would give them legal effect. The proposal was met with laughter and derision from the House of Commons and it is uncertain therefore how much further the Bill will be taken!
The cases that have come before the Court have set out that it may be reasonable to consider the terms of the pre-nuptial agreement as a circumstance of the case or that the parties’ conduct in entering into the agreement should not be ignored. However, the Court has made it clear that they are not bound to follow the terms of the agreement. In 1999, Mr Justice Wall suggested that there may be circumstances in which it would be unjust not to hold one party to an agreement reached with the other party, notwithstanding the fact that the agreement was contain in an unenforceable pre-nuptial agreement. In 2002, a pre-nuptial agreement was taken into account in achieving fairness between the parties. In that case, the Court held that it was unfair to the husband to ignore the agreement and unfair to the wife to hold her strictly to the terms of it. In 2003, a case came before the Court which involved a pre-nuptial agreement signed the day before the wedding and the wife-to-be was expecting a child. Following a very short marriage of just over a year, the Court ruled that the wife’s capital award under the terms of the pre-nuptial agreement was fair but the maintenance provision was insufficient following the birth of the child.
It seems that the more time that passes from the date the pre-nuptial is signed to the date of divorce, the more opportunity there is for events to take place which will make the original terms of the agreement unfair. A periodic review of the agreement, say every 5 years, may therefore be a prudent step to take, to try and ensure that the agreement is as up to date as possible at the time of any divorce. Unless the law changes, there is no guarantee that the Court will feel the terms of a pre-nuptial agreement should be followed, but it could carry more weight.
Helen Cankett, Associate solicitor, Family |
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