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Pre-nuptial agreements: what’s changed?

Charlotte Leckie
Written By:
Charlotte Leckie
Posted:
Updated:
14/02/2014

Pre-nups could soon become legal in England and Wales. Solicitor Charlotte Leckie explains all you need to know.

Pre-nuptial agreements are set to be enshrined in law under plans which would dramatically reform the UK’s divorce laws.

A report by the Law Commission, which advises on reforms of the law to government, is due to be published on 27 February 2014 and it is expected it will propose that the law recognises these agreements.

At the moment, pre-nuptial agreements are not legally binding in England and Wales.

In the event of divorce and financial proceedings, the Court will take a pre-nuptial (or post-nuptial) agreement into consideration when reaching a fair assessment in all the circumstances of the case. The weight given to the terms of the agreement depends on whether the agreement is “fair”.

If you are considering entering into such an agreement, either before or after your marriage, you should ensure that the agreement would not:

• prejudice the reasonable requirements of any children (or future children); or,
• fail to meet the needs of or compensate your spouse (the calculation of a party’s needs is highly fact-specific, as is the principle of compensation, and will depend on factors such as the length of the marriage and the lifestyle enjoyed).

Given the uncertainty of life, your agreement should be reviewed at regular intervals and certainly on the birth of any children or major changes to your financial arrangements.

The Court will also consider the circumstances surrounding the signing of the agreement and you should therefore ensure that:

• you and your spouse/future spouse receives independent legal advice;
• you both intend to be bound by the agreement (this will be assumed);
• full and frank disclosure is mutually provided;
• there is a reasonable period of time between the signing of the agreement and your wedding; and,
• that no fraud, misrepresentation, undue influence or duress at play.

The Court will also consider the age, maturity and life experience of both you and your spouse/future spouse and closer attention to the circumstances surrounding signing will be needed if you or your spouse/future spouse is young or arguably inexperienced.

Will the law change?

The Law Commission’s consultation asked contributors whether there should be a change in the law to allow couples to enter into agreements that oust the discretionary jurisdiction of the Court in financial proceedings upon/following divorce (meaning that such agreements will be binding unless they can be challenged on a contractual basis). It goes on to consider what formalities and safeguards would be required, including the suggestions that:

• there could be certain unacceptable outcomes that would invalidate the agreement. These might include failing to provide for the needs of any children and/or leaving one party with the likelihood they would be reliant on state benefits; and

• this approach would only be appropriate if the agreements were limited to pre-acquired, inherited and gifted assets – meaning that “matrimonial assets” (assets gained during marriage)would remain subject to division according to the conventional principles.

In short, the formalities and safeguards are the same as – though arguably slightly less far-reaching than – the conditions and considerations which currently apply and it appears that the change being suggested will enshrine the current law, developed by the Courts (most recently the Supreme Court in the case of Radmacher v Granatino), in statute.

It may be that in time the Courts will further develop the law to provide more certainty to parties choosing to enter into these agreements but for the time being there is unlikely to be any real practical change.

If you wish to enter into a binding pre/post-nuptial agreement you need to consider the fairness of its effect and ensure the circumstances surrounding its signing do not leave the agreement open to challenge.

Charlotte Leckie is a solicitor at IBB Solicitors

 


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