Prenuptial agreements

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?