Until quite recently Prenuptial Agreements were considered by the courts to be of limited value and even contrary to the sanctity of marriage! However, as a result of the court having recognised a sea change in public opinion within the landmark case of Radmacher v Granatino (which was widely reported in the media), such agreements are now usually considered binding on the parties, unless there is good reason otherwise.
In order to be considered binding it is important that:
• Each party has received independent legal advice before signing
• Each party has fully disclosed their financial situation to the other
• The parties enter into the agreement freely and without any pressure or undue influence
It is important to note that such agreements are also of reduced benefit if children are born and/or the marriage lasts longer than 5-7 years or so.
The agreement should also be fair in its terms. This will depend upon all the circumstances i.e. a multi-millionaire would be expected to make some reasonable provision for the other party whereas if both parties are of limited means, but one wishes to protect a house he or she owns from a claim by the other, this may be perfectly reasonable and no further provision required.
Whilst the case of Radmacher v Granatino involved a substantial amount of wealth, there are a number of reasons why anyone getting married should consider entering into a prenuptial agreement; the assumption that such agreements apply only to those who are wealthy or hold celebrity status is not strictly accurate.
Protecting limited assets
As mentioned above if one party owns even limited or modest assets prior to a marriage, such as equity in a house or savings, they may want to ensure that if things do not work out then such pre-owned assets are excluded from the matrimonial pot of assets for distribution between the parties. Whatever the level of assets, prenuptial agreements are extremely useful in ‘ring fencing’ pre-owned assets in this way.
Second time around
You may have been married and divorced before, in which case your financial assets may already be reduced. You may want to make sure that whatever assets you have retained won’t be further depleted if things don’t work out in your second marriage.
The existence of dependent children from a previous marriage can also be a consideration, whereby the financial security, well-being and interests of dependents would take precedence over those of your new spouse, should a breakdown in marriage occur.
An important and more frequently seen reason for entering a prenuptial agreement is the receipt, or the expectation, of inherited assets. Such an agreement can help ring-fence these assets and be kept separate from any future financial settlement in the case of divorce.
A prenuptial agreement will help to protect any assets that are situated in another country; it is a mistakenly held view that because assets may be held abroad, they would not be taken into account in any divorce settlement. This is not the case and it is more than likely that a UK court will take these into account and consider them to be part of the matrimonial assets regardless how of these would be treated under the law of the country in which they are held.
1ST JUNE 2012