What is a prenuptial agreement?
A prenuptial agreement is an agreement made
before marriage. The parties usually enter into such an agreement
to indicate their respective rights and obligations on
separation
and/or divorce.
A prenuptial agreement normally deals with
division of property, support obligations, and any other matter in
settlement of their affairs. Even in jurisdictions where prenuptial
agreements are accepted, terms involving children (support payments
and custody arrangements) are not generally enforceable.
Are prenuptial agreements enforceable in
England and Wales?
Section 25 of the Matrimonial Causes Act 1973
gives the court wide discretion regarding division of assets and
other matters on divorce. Prenuptial agreements are not mentioned
specifically in the legislation, but in some cases, the court will
take a couple’s prenuptial agreement into account as “conduct”
pursuant to s 25(2)(g) of the Act, which is reproduced below.
S 25(2) provides that the court must take
into account all relevant circumstances and in particular the
following factors:
- the income, earning capacity, property
and other financial resources which each of the parties has or
is likely to have in the foreseeable future, including in the
case of earning capacity any increase in that capacity which it
would in the opinion of the court be reasonable to expect a
party to the marriage to take steps to acquire;
- the financial needs, obligations and
responsibilities which each of the parties to the marriage has
or is likely to have in the foreseeable future;
- the standard of living enjoyed by the
family before the breakdown of the marriage;
- the age of each party to the marriage and
the duration of the marriage;
- any physical and mental disability of
either of the parties to the marriage;
- the contributions which each of the
parties has made or is likely in the foreseeable future to make
to the welfare of the family, including any contribution by
looking after the home or caring for the family;
- the conduct of each of the parties, if
that conduct is such that it would in the opinion of the court
be inequitable to disregard it;
- in the case of proceedings for divorce or
nullity of marriage, the value of each of the parties to the
marriage of any benefit which, by reason of the dissolution or
annulment of the marriage, that party will lose the chance of
acquiring.
Note that pursuant to s 25(3) of the Act, the
welfare of children of the marriage under 18 is generally the
court’s first consideration in issues of separation/divorce.
The Law Commission is expected to issue a
report on the status and enforceability of prenuptial agreements in
the United Kingdom in
2012.
Recent case law on prenuptial agreements
A recent case decided by the English Court of
Appeal, Radmacher v Granatino, may be of assistance in determining
when a court will give weight to a prenuptial agreement. Note,
however, that the facts of the case are unusual.
Radmacher v Granatino
- Ms Radmacher, the daughter of a wealthy
German businessman, and Mr Granatino, a French national, were
married in 1988. Before marrying in England, they had entered
into a prenuptial agreement in Germany. In the agreement, Mr
Granatino agreed not to make a financial claim if they
separated.
- The parties lived in England during the
course of their marriage. They had two daughters, and the
marriage lasted until 2006. In 2003, Mr Granatino gave up an
extremely lucrative job as a banker to take a job paying £30,000
per annum.
- Mr Granatino was awarded £5.85 million by
a High Court judge. The High Court judge did not give any
weight to the prenuptial agreement, which provided that Mr
Granatino would receive nothing from Ms Radmacher, for the
following reasons:
- “First, that the husband had had no
independent legal advice prior to his entry into the contract.
Second, that the wife had given no disclosure of the extent of
her resources prior thereto. Third, that there had been no
negotiations between the parties or their representatives prior
to entry into it. Fourth, that, in the events which had
happened, it would be manifestly unfair to hold the husband to
its terms. And fifth, that the arrival of the two girls had so
changed the landscape as to require it to be put to one side.
The judge did, however, recognise, in the light of the expert
evidence before her -- which I think was unchallenged -- that
both in Germany and in France the contract would be fully
enforced against the husband so as to preclude any financial
recovery for himself. “ (From the Court of Appeal judgment
granting the leave to appeal)
- Ms Radmacher appealed the High Court
decision to the Court of Appeal. The Court of Appeal reduced
the amount Mr Granatino was entitled to receive from Ms
Radmacher. The Court held that Mr Granatino was entitled to
approximately £1 million in lieu of maintenance and that he was
further entitled to a fund of £2.5 million to buy a house. This
house was to be returned to Ms Radmacher when their youngest
child reached the age of 22 years.
- One factor behind the Court’s decision
was the prenuptial agreement. The Court stated that although
Mr Granatino had not sought independent legal advice before
entering into the agreement, he had the opportunity to seek
legal advice and engage in negotiations. Furthermore, the case
had hallmarks of “internationality” and England should be
seeking to reduce the rules of law that divide England from the
member states of Europe where marriage contracts are standard
practice. Finally, it was reasonably foreseeable that Ms
Radmacher and Mr Grantino as a young couple would start a
family.
It will remain to be seen whether this case
changes the courts’ approach to prenuptial agreements.
The following factors may be taken into
consideration by the courts in deciding on the weight to be given to
a prenuptial agreement:
- Has independent legal advice been
received by both parties?
- Have both parties fully disclosed their
financial affairs?
- Was the prenuptial agreement entered into
well before the wedding date?
- Does the prenuptial agreement specify
which country’s law should apply to the agreement, and where any
issue relating to the agreement should be adjudicated?
