What are prenuptial agreements?

Prenuptial agreements or "pre-nups" are entered into by a prospective husband or wife before their marriage to provide for the financial arrangements to be put in place in the event of divorce. Therefore Pre-nups can be used to safeguard your assets.

Pre-nups have been the subject of recent controversy over a change in the way in they are taken into account by the courts.

Are prenuptial agreements enforceable?

Yes in Europe and America. In Britain the courts were not bound to take into account pre-nups but rather had a discretion whether or not to take them into account when making an order for the distribution of the parties assets between them upon divorce.

Following the case of Radmacher determined in the Supreme Court on 20th October 2010 the Judges ruled the court was bound to take the pre-nup into account and gave significant weight to it when reaching their decision in the case.

So following Radmacher provided the pre-nup is:

1. Entered into voluntarily
2. Without undue pressure
3. And each party is informed of the implications

It is likely to be given significant weight and will dissuade a spouse seeking to renege on the pre-nup by issuing court proceedings thus saving on what may amount to considerable legal costs.

Facts of the case:

The husband of a German heiress entered into a pre-nup drafted by a German lawyer. The parties moved to England and the husband gave up his employment as a banker to become an academic. The marriage broke down in 2006 the husband issued court proceedings making a financial claim against the wife. The wife relied on the pre-nup. In the High Court the husband was given an award for almost £6million.

However the Court of Appeal and Supreme Court significantly reduced the husbands settlement. The meaning behind the courts ruling was that the decisions made by the parties should be respected in relation to the way in which they wish their financial affairs to be regulated upon divorce.

Considerations to be taken into account before entering into a pre-nup

Negotiating the terms of the agreement should not be left until the last minute. Legal advice should be taken at least 21 days before the wedding.

Before entering into the agreement each party should discuss their intentions with the other and let them know all about their finances i.e. their income and assets to include valuations of property, bank accounts, pensions and other investments. This is so they can make a considered decision to enter into the agreement. The pre-nup should have a schedule of both parties income and assets attached. Each party should have a proper understanding of the agreement they are entering into.

Reference should be made in respect of:

• the home, any other properties owned and brought into the marriage, ownership of property accumulated during the course of the marriage savings and other investments, pensions and inherited assets.
• Provision for maintenance
• Provision for any current or proposed children
• What will happen if one party dies, retires or is unable to work
• Wills

At Fraser Brown we have the experience necessary to guide you or your clients through the procedure for negotiating and drafting their prenuptial agreement tailored to their specific requirements. etc.