For most, the summer brings wedding season but for family lawyers, less romantically, it is very much Prenup Season. Over the past few years, we have got into a rhythm in April and May of drawing up prenuptial agreements (PNA) ahead of impending summer nuptials. Clients range from first marriages where one or both parties have pre-acquired wealth or expected inheritance, to those entering second or third marriages wanting to protect their own inheritance for children from previous relationships.
Issues for Family Lawyers
At present, PNAs are not legally binding without approval of the court. However, if certain criteria are met then the agreements will be persuasive and can be upheld by a Court, provided they are not deemed ‘unfair’ to either party. The agreements must be contractually valid, made by deed and included a signed statement by the parties. They must not be executed within the 28 days immediately preceding the wedding or civil partnership ceremony. Importantly both parties must have received independent legal advice and disclosure of material information about the other party’s financial situation.
Within this, there can be some common issues that family lawyers will need to be aware of and manage carefully.
One of the key issues practitioners face is the late hour of some clients’ requests. Whilst it is generally understood that PNAs need to be signed 28 days before the wedding, practitioners will always need to consider whether there is enough time to ensure a PNA can be executed, including the completion of full and frank financial disclosure and the signing of the document. The Law Commission recommends the 28-day cut-off to avoid either party feeling ‘under duress’ when signing. Of course, if the 28 days lapses and we move closer to the wedding date, the parties can use a post nuptial agreement instead of a prenuptial agreement. However, this will need to be carefully managed with clients.
Disclosure and negotiations can lead to uncomfortable conversations depending on the individual circumstances. This can also lead to demands from clients perhaps for unrealistic or unenforceable clauses. It is important to remind clients that the agreement cannot go beyond the s.25 factors of Matrimonial Causes Act 1973 or Schedule 5 of the Civil Partnership Act 2004.
Within this, it is not unusual for a prenuptial agreement to have been demanded by a family member of the soon-to-be spouses. Family wealth can be the cause of some tension. Navigating these familial relationships can be difficult. In some cases, the client can be unconcerned about getting a PNA themselves but acting on the wishes of parents or grandparents. In such situations, it must be clear that the agreement has not been signed under duress. Financial disclosure must be thorough to ensure the agreement is as watertight as possible.
We have experience of one-party approaching use for a PNA without having first spoken to their soon to be spouse to explore their options and the benefits of any such agreement.
Prenups for the people
With the influence of the media and celebrity PNAs, it is not just high-net-worths instructing on nuptial agreements. Those with smaller asset bases need to be made aware that their PNA may not have the same effect in divorce as finances and assets will be divided according to needs, to ensure each party is provided for. These conversations can be sensitive, but it is important for practitioners to be as transparent as possible about the potential weight of a PNA in a needs-based financial settlement.
Reminders for clients
Despite divorce rates, clients remain optimistic about marriage (as they should!) but this can lead to ‘rose tinted glasses’ approach when negotiating a prenuptial agreement, it is important we are able to carefully scrutinise a PNA and protect the client’s best interests, in the worst-case scenario.
Family lawyers will need to draw attention to the review clause to allow the parties to reflect on the changing elements of the family including any new children, inheritance or a move to another country. If the married couple later move abroad, they should be aware that the PNA may not be upheld in that country, in the same way that a PNA drafted abroad may not be upheld here, depending on the circumstances, international advice from a lawyer in that jurisdiction may be required.
The future of prenups – concerns for family lawyers
The seminal case in this area of law is Radmacher v Granatino, which saw its 15 year ‘anniversary’ earlier this year. This groundbreaking case saw the Supreme Court holding that a prenuptial agreement should be given decisive weight unless it can be demonstrated that it is unfair or has been entered into unwillingly.
In the intervening period, the debate around PNAs has continued.
Practitioners should keep their eyes and ears open on this topic as a 2014 Law Commission Report recommended ‘qualifying nuptial agreements’ should be legally binding. This could lead to more couples wanting qualifying nuptial agreements and the agreements to become less taboo. What constitutes a ‘qualifying’ agreement will broadly follow the same requirements for a PNA however it is anticipated that qualifying agreements are likely to be contractually enforceable when dealing with sharing cases rather than needs, the reason for this is to ensure the Court have oversight of the fairness of any financial agreement reached upon divorce.
In the meantime, protecting our clients’ best interests whilst remaining realistic is the focus of the next few months.
Anu Kurl is a Partner at Stowe Family Law
