Sensible or Cynical: Pre-Nuptial and Post-Nuptial Agreements
Following the Supreme Court’s landmark ruling in the 2010 case of Radmacher v Granatino, both public perception and the view of the Court in respect of Pre-Nuptial Agreements was seismically changed. Whilst opinion is still very much split on whether such agreements are sensible or cynical, the Supreme Court’s decision has at least offered clarification on the legal standing and validity of both Pre- and Post-Nuptial Agreements.
Historically, Pre-and Post-Nuptial Agreements were not given weight in legal proceedings due to the perception that women would not have been able to sit at the bargaining table on equal terms due to existing societal norms, as well as the fear that agreements of this nature would only serve to encourage divorce.
This all changed in 2010 with the Radmacher v Granatino case which involved a husband and wife who married in 1998 having signed a Pre-Nuptial Agreement a short time before their marriage. The wife was heir to a large fortune from a paper industry and wanted to ensure that her inheritance was protected in the event that the couple’s marriage was to break down. The parties agreed that neither party would benefit from the property of the other on divorce, with the wife, Ms Radmacher claiming that this was proof that they were marrying for love, not money.
Ultimately, the marriage did break down in 2006 with the husband, Mr Granatino, applying to the High Court for financial relief. Whilst Justice Baron did consider the Pre-Nuptial Agreement agreed between the parties, she determined that the persuasive nature of same was diminished as Mr Granatino had not received independent legal advice before agreeing to it.
Ms Radmacher successfully appealed this decision in the first instance at the Court of Appeal, before her husband took further proceedings to the Supreme Court, who subsequently ruled in favour of Ms Radmacher ruling that the Pre-Nuptial Agreement was legally enforceable, and that Mr Granatino had no right to renege on same. The Supreme Court further ruled that both Pre- and Post-Nuptial agreements have ‘magnetic importance’ and couples should be held to them save for circumstances in which they were either unfair in the way in which they were created, or the effect that they would have.
What is a Pre-Nuptial/Post-Nuptial Agreement?
In essence, a Pre-Nuptial Agreement is a written agreement between parties who are to be married which is entered into before the date of marriage. The intention is that the agreement deals with how the parties’ respective assets are to be dealt with in the unfortunate event that the marriage breaks down and divorce proceedings become necessary. Assets can include but are not limited to property, business shares and monetary savings.
A Post-Nuptial Agreement on the other hand is an agreement between a couple who are already married, but similarly, wish to protect their own assets. Post-Nuptial Agreements can also be used to alter the terms of an existing Pre-Nuptial Agreement.
Benefits of Pre-Nuptial/Post-Nuptial Agreements
The benefit of having either a Pre or Post -Nuptial Agreement in place is that couples are clear from the outset as to how assets will be split in the event of the marriage breaking down. They are also a sensible way to protect assets brought into a marriage and can help save both time and costly legal fees should separation occur.
In the absence of a Pre- or Post-Nuptial Agreement, the decision as to how assets are to be split will be left to the discretion of the Court should agreement not be reached between the parties. Very often, the Court’s starting position will be a 50/50 split of the assets between the parties but this will be dependent on relevant factors such as duration of marriage, children of the marriage and conduct of the parties.
Process of agreeing a Pre-Nuptial/Post-Nuptial Agreement
Initiating a conversation relating to an agreement of this nature can often be a very sensitive and difficult conversation. It may be beneficial to receive further information from legal representatives as to the practicalities of these agreements and the often-costly alternative of Ancillary Relief proceedings.
As per the Radmacher v Granatino case, it is crucial that both parties receive independent legal advice before entering into either a Pre or Post Nuptial Agreement. Failure to do so will render any agreement made between the parties invalid. Any agreement made will also not be considered valid should it be unreasonable or unfair.
Following independent legal advice, both parties will be required to provide full and frank disclosure of any and all assets that they have including investments, property and any bank accounts, which is known as discovery. Mutual exchange of discovery is then facilitated and thereafter, both parties can sign an agreement in the knowledge that they are fully aware of any and all assets that their spouse has the benefit of.