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Courts give green light for pre-nuptial agreements

8.12.2010

Judges in England and Wales have wide-reaching powers when it comes to deciding divorce financial settlements and in consequence the outcome can be difficult to predict. A pre-nuptial agreement can be used to try and enable a wealthy spouse to protect his or her assets in the event of a divorce. Such an agreement seeks to record the consequences of the marriage failing and avoid acrimony and costly legal battles.

Whilst the press have hailed the judgment in the recent case of Radmacher v Granatino as a victory for pre-nuptial agreements in England and Wales, for the majority pre-nuptial agreements will probably not be worthwhile.

In this case the Supreme Court upheld the provisions of the parties’ agreement. However, both parties were independently wealthy with Mrs Radmacher becoming ultimately and by reason of the agreement the wealthier of the two and by a significant margin. The court did not say that in all cases pre-nuptial agreements will be upheld. It said that “if in all the circumstances of the case, upholding the provisions of the agreement would not result in an unfair outcome, its terms should be affirmed, but if one party is left unable to meet their financial needs by the agreement it will be ignored.”

This appears to create a rebuttable presumption that such agreements will be affirmed. If it does this is a huge shift from the previous approach where the burden was on the person benefiting from the pre-nuptial agreement to fight hard to show why it should be affirmed.

If an agreement stands any chance of being affirmed both parties will need to have been given the opportunity to seek independent legal advice without feeling pressured in any way to sign and hence must freely enter into the agreement. So the closer to the wedding the negotiations are started, the more susceptible the agreement may be to being ignored.

Interestingly, the court made no distinction between pre and post nuptial agreements which means that financial agreements entered into during the marriage are unlikely to be treated any differently to those entered in anticipation of it.

For more information on pre-nuptial agreements contact Melissa Markham at Gullands by email: [email protected].

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