Pre and post nuptial agreements (together called ‘nuptial agreements’) are agreements made either before or after marriage, setting out how the parties to a marriage will deal with some or all of their matrimonial assets. They are particularly useful for preserving assets that were acquired before marriage (for example, shareholdings in family companies, or particular family assets and heirlooms), and also for regulating what may occur in the future if one or both parties inherit assets and heirlooms from their own side of the family.
Is The Law Catching Up?
Nuptial agreements are a rapidly developing area of family law. It is a useful example of how society eventually forces the law to adapt and change.
The Past: The Background
Over 20 years or so ago nuptial agreements were not generally enforceable in English law. There were two fundamental problems. Firstly, Judges were not allowed to give effect to agreements that contemplated the possibility of a future divorce, and were therefore void because they might encourage the breakdown of marriage. Secondly, Judges were not allowed to give effect to agreements that might interfere with the Courts’ own powers and way of doing things at a later date.
Gradually, however, there have been various landmark legal cases which have opened up the ability of the Courts to deal with nuptial agreements, and in a 2010 case (Radmacher V Granatino) the Supreme Court said that, provided each person has a full appreciation of the implications of the agreement, then the Court should give effect to those agreements unless it would be unfair. These principles are more or less identical to the principles applied in most divorce financial settlements.
Accordingly, it is possible to make nuptial agreements either before or after the marriage, and provided that they are fair and that they also meet various other conditions and guidelines, they are likely to be enforced by the Court. One difficulty remains, and that is whether the parties have children. Clearly, if the parties make a nuptial agreement, then go on to have children together, but the nuptial agreement does not make proper financial provision for those children then the Courts will override the Agreement in order to provide for the children, but that is, and always has been, the Courts’ priority, and in a sense there is nothing new or unusual about the Courts taking such a view (it is probably what we would want the Courts to do!).
Current and Future Guidelines
Combining the current practice and future guidelines, it is recommended that the following are observed:-
- Ensure that any agreement that you draw up is contractually valid and enforceable (there are certain legal rules to be followed before a contract becomes legally valid).
- Ensure that the agreement is also drawn up in the format of a deed, and is executed as a deed.
- Ensure that the agreement contains a statement signed by each party that he or she understands that the agreement will restrict the Courts’ discretion to make financial orders.
- Ensure that the agreement is not made during a period of 28 days ending on the day in which the marriage (or civil partnership) is formed.
- At the time the agreement is formed each party must have made full written disclosure of all information about their finances to the other.
- At the time the agreement is formed both parties must have received independent legal advice, and a compelling statement to that effect should be contained on the face of the agreement.
The Future of Nuptial Agreements
The Law Commission for England and Wales has recently published its report (March 2014) on Matrimonial Property, Needs and Agreement, in which it recommends that there is a draft bill called the Nuptial Agreements Bill, and in which it also recommends that certain qualifying agreements (Qualifying Nuptial Agreements) be accepted by the Courts. It is interesting that lawyers have moved to catch up with society’s needs, but what is now needed is for the politicians to move too and to bring the draft bill relating to nuptial agreements into effect. However, even before the draft bill comes into effect do please remember that agreements which follow the guidelines set out above are still likely to be viable and accepted by the Courts today, provided that they also meet the overall objective of being fair.