Proctor Moore Solicitors

You may wish to enter into an agreement to set out terms in the case the marriage fails and such an agreement can be enter before or after the marriage. We deal with the process at a fixed fee.

Prices start from £1,000.00 (excluding VAT) – Terms and conditions apply.

Legal Status of Pre-nuptial Agreements

Pre-nuptial agreements are not legally binding in England and Wales. This means that by entering into a pre-nuptial agreement, one cannot override the court’s ability to decide how finances should be divided on a divorce. However, when considering an application for financial remedy, the court must give appropriate weight to a pre-nuptial agreement as a relevant circumstance of the case.

Following the Supreme Court decision in Radmacher v Granatino [2010] UKSC 42 in October 2010, the court will uphold a pre-nuptial agreement that is freely entered into by both parties with a full appreciation of its implications, unless in the circumstances it would not be fair to uphold the agreement. Provided that test is met, the court will give effect to a pre-nuptial agreement.

Advantages

The advantages of entering into a pre-nuptial agreement include:

• Clarity. The parties can make it clear to one another that certain property belongs to the other and will not be shared during the marriage or on any future divorce. Such property is often referred to by family lawyers as “non-matrimonial property”. The definition of non-matrimonial property is unclear in case law, but can be clearly defined in the pre-nuptial agreement so that the parties are aware of the extent of each other’s non-matrimonial property and the value of any property they are giving up the rights to share.
• Certainty. The parties can agree at the outset of their marriage how their finances will be divided if they later separate or divorce. This should save them both the uncertainty, time and stress of litigating about the finances if they were later to separate or divorce.
• Transparency. The parties should provide financial disclosure of their assets and income in the agreement, so they will both know at the outset of the marriage the value of each other’s assets, which will assist them in their negotiations.
• May save money. While the parties will incur legal fees for preparing and advising on the terms of the agreement, it is usually much less expensive to negotiate and draft a pre-nuptial agreement than to litigate about the division of their finances should they later separate or divorce.
• Protection of assets. The parties can protect assets they may wish to “ringfence” from one another, such as inherited assets, family heirlooms, an interest in a family business, gifts received from a third party, or property acquired before the marriage. If the agreement ringfences such property, the court is less likely to award a share of that property to the other party on any future divorce.
• Debt protection. If a party has significant debts, either now or in the future, the pre-nuptial agreement can be used to protect his/her assets from being used to satisfy those debts. (This will also be the case with any debts a person may have now or in the future.)
• Compensation for loss of career. The parties can agree that if, during the marriage, either give up a potentially lucrative career to care for the family, that person should be entitled to a greater share of the assets on the breakdown of the marriage to reflect their loss of earning power going forward. It is often difficult to convince the court to award an element of “compensation” for loss of career, but provision for compensation in the pre-nuptial agreement is likely to be upheld by the court.
• Protection of family members. If either party has children from a previous relationship marriage, a pre-nuptial agreement can protect the financial interests of children from a previous relationship ormarriage by ensuring certain assets are ringfenced for them in the pre-nuptial agreement.
• Minimises acrimony on divorce. Setting out how assets are to be divided on divorce in the pre-nuptial agreement should lead to fewer arguments about finances should a party later divorce and result in a more amicable relationship between them.
• Improves communication. Discussing financial issues can be one of the most difficult aspects of marriage. Dealing with this at the outset of the marriage can strengthen a relationship and support good communication in the marriage.
• Protection of business partners. If either party has an interest in a family or small] private business, the pre-nuptial agreement can protect that interest and prevent disruption to the business if the marriage breaks down in the future. This could prevent a situation whereby a party is or are awarded an interest in the business and has or have to participate in its running with family members or business partners.
• Provision on death. The pre-nuptial agreement can set out what should happen to a parties assets on their. This can support the provision contained in a parties will and clarify what should happen to certain assets. For example, the inheritance prospects of children and grandchildren can be protected in the agreement.
• Freedom to agree your own terms. The parties may have a creative plan for dividing assets should they divorce. A pre-nuptial agreement provides the parties the freedom to agree their own terms without the court imposing a solution.
• Marrying for money concerns. If a party shows commitment to negotiating a pre-nuptial agreement that leaves the other party with fair and reasonable financial provision, which may provide peace of mind

Disadvantages

The disadvantages of entering into a pre-nuptial agreement include:

• Not legally binding. A pre-nuptial agreement will not necessarily be binding, as currently the court remains able to make financial orders on the breakdown of a marriage. The court will uphold a pre-nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances it would not be fair to uphold the agreement.
• Difficulties making financial provision for children. A court considering financial claims on divorce will primarily be concerned with ensuring any child of the family is financially secure. The court is likely to be sceptical that arrangements drawn up years previously will be in the best interests of the child(ren). Also, making provision for future children is fraught with difficulties as the pre-nuptial agreement cannot predict future circumstances. Any clauses dealing with child maintenance will be subject to review if the other parent questions the adequacy of the arrangements, because the jurisdiction of the Child Maintenance Service (CMS) cannot be ousted by agreement between the parents and a parent can apply to the CMS for a maintenance calculation at any time.
• Choice of law clause not effective. If the parties wish for a jurisdiction of Court outside England and Wales to deal with any future breakdown of your marriage, such clause will not bind the English court.
• Changes in circumstances. A pre-nuptial agreement cannot predict what will happen during the marriage and significant changes in circumstances may occur.  Should circumstances change, a pre-nuptial agreement that does not cover the changes will lose its relevance and is unlikely to be upheld by the court.
• Review. To increase the likelihood of a court upholding the terms of the pre-nuptial agreement on the breakdown of the marriage, there should be a review clause that triggers a review of the terms on a significant change in circumstances, such as the birth of a child or bankruptcy. A review of the pre-nuptial agreement will result in further time, legal fees and perhaps difficulties agreeing any changes that should be made to the agreement. As a review is likely to be made when there has been a significant change in circumstances, the timing of renegotiating the terms of the agreement may be awkward.
• Negative pre-emption. A party may find the concept of a pre-nuptial agreement setting out what will happen to their finances should the relationship fail may be considered as a pre-emption that the marriage will fail and cause unnecessary stress to the parties.
• Bad timing. Preparing for a marriage is stressful, and the added pressure of considering financial issues and negotiating the terms of a pre-nuptial agreement can put strain on a relationship.
• Vulnerability of economically weaker party. Sometimes the economically weaker party wants to agree to clauses limiting his or her rights simply to get the pre-nuptial agreement finished so he or she can concentrate on the wedding. To ensure the pre-nuptial agreement is fair to both parties and has the best possible chance of being upheld by the court, the parties must be aware of the implications of each clause and whether it is of benefit to them.
• Can cause family upset. A request for a pre-nuptial agreement may upset wider family members, such as parents, who may feel affronted and perceive the agreement as a reflection of a lesser social status or an implication that their son or daughter is seeking material advantage from the marriage. This can put strain on family relationships.]
• Parental influence. Sometimes the parents of the economically stronger party drive the pre-nuptial agreement. A pre-nuptial agreement can end up reflecting the parents’ wishes rather than those of the couple.
• Inheritance issues. If a party waives inheritance rights in the pre-nuptial agreement and his or her spouse dies while they are still married (and did not provide properly for the other in a will) he or she may be in a precarious financial position.
• Legal fees. A pre-nuptial agreement can save a significant amount of money if there are later divorce and financial proceedings, but if the marriage survives, the legal fees spent in drafting and negotiating the terms of the pre-nuptial agreement will effectively have been waste.