What is a prenuptial agreement?
A prenuptial agreement is an agreement made before a marriage takes place, governing the parties’ respective rights and obligations if they were to separate on divorce. Prenuptial agreements are increasingly popular, and normally deals with the division of property and assets, maintenance obligations, and other matters on potential divorce.
Are prenuptial agreements enforceable in England and Wales?
There is no legislation as yet specifically governing prenuptial agreements, and the existing law has been developed by the courts through case law. As a general rule, they are not automatically legally enforceable, but the courts will give great weight to prenuptial agreements in financial remedies proceedings where there is one in existence. In some cases, the courts will even uphold a prenuptial agreement.
It’s important to note that section 25 of the Matrimonial Causes Act 1973 gives the court wide discretion as to the division of assets on divorce. As far as prenuptial agreements are concerned, the court may take a prenuptial agreement into account as “conduct” for the purposes of section 25(2)(g) of the Act. Section 25(2) lists particular factors the court must take into account, including:
- 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 the welfare of any children of the marriage under 18 is of paramount consideration to the court when deciding financial issues on divorce.
What’s the current law on prenuptial agreements?
The landmark ruling of the Supreme Court in Radmacher v Granatino  UKSC 42 is the most important case involving prenuptial agreements. It lays down three important factors that, if satisfied, mean the court may uphold the terms of the agreement:
The agreement must be freely entered into: the parties should both take independent legal advice, and be of sound mind and in a balanced emotional state. Where there is any doubt that one party was under undue influence or duress, the court is likely to take the view that the agreement was not freely entered into.
The parties must have a full appreciation of the implications of the agreement: if, for instance, one party did not disclose all their assets to the other before the agreement was concluded, the other party will not have been in a position to give fully informed consent. If so, the agreement may not be upheld.
It must not be unfair to hold the parties to their agreement in the circumstances prevailing: the outcome for the parties must be fair. For example, in the case of a very long marriage where the parties’ financial circumstances have changed markedly, the terms of the prenuptial agreement are highly likely to have become stale through the passage of time and, as a result, no longer a fair agreement.
In addition, a prenuptial agreement must not be entered into less than 21 days before the marriage – otherwise it will not be enforceable.
What’s the future?
Following an important review, the Law Commission recommended proposals for legally binding ‘qualifying nuptial agreements’. No firm plans have yet been made and, until the Government presses ahead with new laws, case law remains the source for the law on prenuptial agreements.