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Need vs greed: the importance of pre-nuptial agreements

Celebrity divorce cases and financial settlement often hinge around the existence and terms of a pre-nuptial agreement. However, a well-prepared pre-nup should very much part of any modern marriage here in the UK, especially given the position the courts are currently taking, as LGFL Managing Director Rita Gupta explains.

A pre-nuptial agreement is a written and signed agreement between a couple that first lays out what they bring to the marriage or civil partnerships in terms of assets. It then sets out how these assets (and other joint assets accumulated during the marriage) will be divided should the couple divorce of have the civil partnership dissolved.

Pre-nups are not legally binding in England and Wales, which means they are not automatically enforceable by court. However, they are one of the many factors a court can consider when ordering a financial settlement.

Back in 2010, the Supreme Court ruled that:

“Courts 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 … The fairness of upholding any particular agreement will be considered by the court on a case-by-case basis.”

This basically means that a court can decide whether a pre-nuptial agreement should be upheld or not.

 

What needs to be in a pre-nup?

What details go into a prenup is very much down to the couple, but it does need to be clear and “fair”. Otherwise, it can lead to disputes when the couple separate.

In a recent case of Helliwell and Entwistle (great name), a couple split after three years of marriage with no children. The couple had signed a pre-nup that stated that each would retain their own property, split all joint property and (importantly) neither party would make a claim against the other upon separation.

When the couple split, the wife disclosed considerable wealth with assets worth over £61.5million, whilst the husband declared assets of £850,000. Despite the terms of the pre-nup, the husband sought a settlement of £2.4million from his wife, stating that his wife said that he would always be provided for.

So, there was a pre-nup that clearly stated that neither party would claim, and a husband making a claim. What would the court decide?

 

“Not the way that prenuptial agreements work”

Mr Justice Francis ruled that the terms of the pre-nup should stand, telling the husband that he would not “tear up the prenuptial agreement” as:

“It is ridiculous … (for you) to say on the one hand, I am signing this and I am recording on the face of it that I know what I am doing, I know what the consequences of it are, I know I get nothing, and yet, on the other hand, like a child with his fingers crossed behind his back say it will be all right really. That is not the way that prenuptial agreements, documents of this kind work.”

We couldn’t agree more - so long as one person in the relationship was not coercing the other into signing something they did not agree with. The ‘red flag’ to us was the fact that in this case, the prenuptial agreement was signed on the day of their marriage. The judge clearly took this into account, but it’s not a timescale we’d recommend, and it does open the agreement up to challenge.

 

Pre-nup agreement timings

Pre-nups are important documents and are definitely not to be rushed or signed without fully understanding the implications. At LGFL, we regularly help couples of all ages draw comprehensive pre-nuptial agreements that take a realistic view of both the situation at the time of the marriage and into the future as well.

if you’d like to discuss a pre-nup, we suggest contacting us at least six months before your wedding date. Then you have plenty of time to draw up an agreement alongside the planning of your special day, rather than rushing things at the last minute when your mind is on seating plans, etc. Request your initial reduced fee consultation now or

- Call us

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Pre-nups and cohabitation agreements

The latest ONS stats for 2021/22 show that 9 out of 10 couples who get married are already cohabiting (3). What’s more, the average age on marrying is 32.7 years for men and 31.2 years for women. So, couples will be bringing more and more assets as individuals to a marriage. Family money may also be involved in helping with home or rental deposits and mortgages.

Couples may already have a family before getting married. In 2021, for the first time since records began, the number of children born to non-married parents (51%) outnumbered those born within marriage (49%). So, any pre-nup should also take into account the needs and requirements of children too, as they will be the court’s paramount consideration.

It’s important to remember that cohabiting couples do not have the same legal rights as those who are married or in a civil partnership. That alone is a strong reason to have a cohabitation agreement in place when you are living together. Before you marry, this cohabitation agreement can be “upgraded’ into a pre-nuptial agreement well in advance of the ceremony itself.

 

“I need that money”

Financial settlements after divorce and separation largely focus on what each person needs. The judge in the case above decided that if the pre-nup had provided for the husband’s reasonable needs, an award of £455,00 would have been made, and indeed the judge did this. However, the judge also ordered the husband to pay £75,000 for the wife’s significant legal costs, which was then deducted from his £455,000.

 

Pre-nuptial and cohabitation agreements

if you are considering a cohabitation, pre-nup or post-nup agreement, do get in touch. We offer a reduced feed initial consultation, providing 60 minutes of discussion time and legal advice to help you decide what’s best for you, your partner and your family.

Request your initial reduced fee consultation now (link) or

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