A prenuptial agreement is a contract between a couple intending to marry or to enter into a civil partnership to regulate their affairs in the event of the relationship coming to an end. Prenuptial agreements usually focus on the financial arrangements that would apply on divorce or dissolution of the civil partnership, but can also include provision for other practical matters such as where the divorce or dissolution will take place. A postnuptial agreement, meanwhile, is a contract between already married couples or existing civil partners which sets out what will happen to the income and capital resources of the parties in the event that their relationship ends.
These agreements will deal with the following types of issues:
- How property owned prior to the marriage or civil partnership will be dealt with.
- What will happen to the family home.
- What will happen to any jointly-owned property.
- What will happen to assets inherited prior to or during the marriage or civil partnership.
- What level of child or spousal maintenance will be payable and for how long.
- How liabilities (e.g. debts) will be dealt with.
- What arrangements should be made for the children, such as living arrangements, schooling, payment of school fees and child maintenance.
The agreements can include clauses specifying reviews at key events, such as the birth of children or the parties reaching their five, 10 or 20 year anniversaries to ensure that the agreement remains fair and reasonable.
There is no guarantee when entering into a prenuptial or postnuptial agreement, however, that the Court will follow it to the letter in the event of a subsequent divorce or dissolution. There is no provision for upholding such agreements in statutory (written) law and on divorce the Court has jurisdiction (legal authority) to deal with financial matters.
Cases will be determined in accordance with the Matrimonial Causes Act 1973 and/or the Inheritance (Provision for Family and Dependants) Act 1975 where that is relevant. However, in recent years evidence suggests that the Courts are now more likely to conclude that parties to prenuptial or postnuptial agreements should be held to them or at least that these agreements should carry significant weight, provided the formalities outlined below are complied with. For example, the Supreme Court in the case of Radmacher v Granatino determined that a prenuptial agreement could have ‘decisive’ or ‘compelling’ weight when considering claims.
In order to carry full weight, the following formalities must be complied with:
- The agreement must be entered into by the parties of their own free will and without any undue influence, duress or pressure.
- Both parties must be fully informed of the ramifications of entering into the agreement.
- There must be no failure to disclose material (relevant) information or advice.
- Each party should intend that the agreement to determine the outcome of the financial arrangements following divorce or dissolution.
- The agreement should deal with each party’s needs, the sharing of assets and compensation insofar as it is relevant to the parties’ circumstances.
The judgment of the Supreme Court in Radmacher v Granatino indicated that:
“a Court should give effect to a pre-nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless, in the circumstances prevailing, it would not be fair to hold the parties to their agreement”.
Subsequent judgements have confirmed that approach and there are indications that agreements will be upheld in most cases, provided needs are met and that both parties fully understood the consequences of entering into the agreement.