Everyone’s initial response is that nuptial agreements are not legally enforceable in English law, as yet. That is both right, and not right.
The Law Commission has put forward a proposal to make nuptial agreements legally binding in most circumstances (more of which later). While we wait for the government to legislate, in the meantime anyone entering into a nuptial agreement needs to be aware that they are not automatically legally binding.
However, those entering into these agreements also need to be aware that the courts could hold them to the terms of the agreement, or if it does not do that, they are likely to give considerable weight to the terms of the nuptial agreement. What weight will be applied can be influenced by ensuring a few important steps are followed.
The seismic change in the law came about in the case of Radmacker (formerly Granatino) v Granatino in 2010. The Supreme Court upheld a prenuptial agreement, the terms of which were quite harsh as to the provision to be made for the financially weaker party.
Impact of Nuptial Agreements
It was thought by some that the fact the losing party was the husband rather than the wife influenced the outcome, but the cases that have followed have not taken that line but rather emphasised the parties’ right to set their own terms. To quote Lord Philips in Radmacker:
“the reason why the court should give weight to a nuptial agreement is that there should be respect for individual autonomy … This is particularly true where the parties’ agreement addresses existing circumstances and not merely the contingencies of an uncertain future.”
The Radmacker decision has been a ‘game changer’ in this respect. To quote another Judge, Charles J in the case of V v V in 2012:
“The respect to be given to individual autonomy means that the fact of an agreement can alter what is a fair result and so found a different award to the one that would otherwise have been made.”
Entering into a prenuptial agreement is therefore setting out the provision that the parties agree will be the way their assets, both as they exist at the time of making the agreement and those accumulated during the marriage, should be dealt with on divorce.
Safeguards
If the courts are prepared to let couples take these decisions into their own hands, they expect there to be some safeguards in place, to avoid a weaker party being coerced or simply tricked. Case law has stated that anyone entering into a nuptial agreement must do so freely and with sufficient independent legal advice to enable them to appreciate its implications. It must be clear that each party intends the agreement to govern the financial consequences of the marriage coming to an end.
Recommendations
When drafting nuptial agreements, it is important to ensure compliance with the Law Commission recommendations:
- The agreement should be signed and dated at least 28 days before the marriage (for prenuptial agreements).
- The nuptial agreement should be made by way of deed.
- Both parties should sign a statement within the agreement that they understand it will remove the court’s discretion to make financial provision orders (with an exception).
- Both parties should provide details of their financial position.
- Both parties should obtain independent legal advice as to the terms and effect of the agreement under the law of England and Wales.
The exception referred to above is that the court can still impose their own view if the agreement leaves either party without sufficient provision to meet what the court determines are their reasonable financial needs.
If the court is not persuaded that it should hold the parties to the agreement because it does not provide for a party’s needs, the agreement can still be relevant, operating as a depressing factor i.e. bringing down the financial provision the court makes, departing from what would usually be ordered.
Protection
So, for many, nuptial agreements can offer considerable protection, when drawn up correctly.
For those seeking to ringfence assets, there is little to lose and much to gain by entering into a nuptial agreement.