Have a Clue Before you say I do
Published: 16 May 2014
Prenuptial Agreements: The Current Position
The Law Commission published its long awaited report "Matrimonial Property Needs and Agreements" on 27th February 2014 in which it recommended the introduction of legally binding "qualifying nuptial agreements” that would be enforceable provided the following conditions were met :
- The agreement must be in writing.
- Both parties must have received independent legal advice and made full financial disclosure.
- No fraud, undue influence, misrepresentation or duress should be involved at all.
- The agreement itself should be signed by the parties no less than 28 days before the wedding and they should be made aware that such an agreement will partially remove the court’s discretion to make financial orders in a contested divorce.
According to the Law Commission, any agreement made between spouses or civil partners either before or after the marriage should be upheld if the above requirements were successfully met by both parties. As a result of the proposed legislative changes, marrying couples would obtain greater financial autonomy, control and certainty rather than the unpredictability of judicial discretion with the redistribution of assets in contested divorce proceedings.
Furthermore, binding nuptial agreements would hopefully assist couples in avoiding the protracted delays, stress and potentially high costs of litigation when the matter is disputed and taken to court.
With the benefit of a legally binding agreement, couples will also be able to protect and safeguard both existing and future wealth and inheritances as well as make provisions for the maintenance and welfare of their children.
Hopefully, couples will be able to plan ahead and avoid the stress and pitfalls that come along with a messy divorce battle in the courtroom.
Besides considering nuptial agreements, The Law Commission also looked at how the courts should deal with property assets that one party brings into the marriage, as well as reviewing the significant issue of inheritances and gifts received by the couple during the marriage itself.
Despite the much improved recognition and enforceability of prenuptial agreements in the aftermath of the landmark Supreme Court decision in the case of Radmacher .v. Granatino, they are still closely scrutinised by the courts in order to establish fairness of terms within the agreement itself and to ensure that the necessary conditions have been met by both parties.
In the Radmacher case, the Supreme court ruled that a prenuptial agreement would be given effect provided that it was freely entered by each party, with a full appreciation of its implications. The Law Commission report and its findings echo this ruling too.
Most importantly, the Law Commission has pointed out that a person cannot contract out of their financial responsibilities or obligations to the other spouse or the children. Once again, fairness must be clearly established within the terms of the agreement and throughout the process of discussion and negotiation between the parties beforehand.
Whilst it appears that the courts will continue following the clear guidelines set by Section 25 of the Matrimonial Causes Act 1973 in deciding upon the redistribution of assets following the breakdown of the marital relationship, many legal practitioners hope that the Law Commission proposals on nuptial agreements will facilitate a less costly and less stressful resolution to financial disputes in the aftermath of contested divorces.
Essentially, the recommendations put forward by the Law Commission regarding qualifying nuptial agreements will hopefully have a positive effect on the institution of marriage especially as such agreements will provide certainty to couples as to how assets will be divided in the event of a relationship breakdown and divorce.
It is therefore far wiser to have a clue before you say...”I do”.
For specific advice and information on prenupital agreements, divorce or any other aspect of family law, please contact Eugene Fan, Consultant Solicitor in the Family Team.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.