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Prenuptial Agreements… Do they really work?

Prenuptial agreements are not legally binding in England and Wales. However, as long as a prenup has been properly drawn up and each person sought independent legal advice before signing it, the court may choose to adhere to the terms of the agreement.

Will a prenup be enforced?

The matter of whether or not a prenup ‘works’ is a difficult one. Lots of clients ask us whether a prenuptial agreement will actually be enforced, and there is some skepticism as to their usefulness, particularly as they are not automatically legally binding in England and Wales. But prenuptial agreements are being taken more and more seriously by the courts.

The turning point was a case in 2010 involving a divorce between a German heiress, Katrin Rachmacher, and a French investment banker, Nicolas Granatino. The couple lived in London so began their divorce proceedings in England. The husband made a financial claim and was awarded a divorce settlement of £5.6 million by the High Court. But prior to the marriage, the couple had entered into a prenuptial agreement, in which they agreed that if they ever got divorced neither one would make a financial claim on the other. The wife therefore appealed the decision and the case ended up in the Supreme Court, which found in her favour. In other words, it implemented the terms of the prenuptial agreement.

Since this ground-breaking case, prenuptial agreements are becoming increasingly influential when it comes to divorce settlements. While they are still not ‘legally binding’, a court will consider the fact that there is a prenup in place and has the discretion to enforce it. This means that in certain circumstances, prenups do work.

When will a prenup be enforced?

This inevitably leads to the question – in what circumstances will a prenup be enforced? There are three factors that increase the likelihood of a prenuptial agreement being implemented, which are –

1. The agreement was freely entered into by both people
Both of you must be happy to enter into a prenup. While one of you may come up with the idea, the other must not be pressurised or forced into it.
2. Both people fully understand the implications of entering into the agreement
Both of you must seek independent legal advice (meaning different solicitors) to ensure that you fully understand the implications of signing the agreement. This is particularly important for the financially weaker person, who could otherwise be entitled to a far greater share of their spouse’s assets, should the marriage end in divorce. You must appreciate that by signing the agreement, you are potentially giving up this right.
3. It would not be unfair to each person to enforce the terms of the agreement
A divorce settlement must always be fair and reasonable to each person. If enforcing the prenuptial agreement would mean that one person is left financially unstable, the court is likely to decide against it.

This often happens when your circumstances have changed since you made the prenup. For instance, you may both have had extremely successful careers when you entered into the prenup, but now one person has been made redundant and so is financially dependent on the other. Or one person may have given up their career in order to care for the children you have had since getting married. Again, it would be unfair not to give this person any financial support.

Interested in getting a prenup?

As long as the above criteria are fulfilled, there is a very good chance that your prenup will be enforced, should your marriage breakdown in the future. A solicitor who specialises in family law will be able to advise you further, explaining whether or not a prenuptial agreement would be suitable in your situation.

If you would like to speak to one of our family law solicitors, please do not hesitate to contact us. For an informal chat or to book a consultation, call us on 0333 4564 444, or for international calls, dial +44 1992 505 406.

 

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