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PRE-NUPTIAL AGREEMENTS

Parties enter into Pre-nuptial agreements before marriage to agree what happens to their property and money in the event of a separation or divorce. In England and Wales however, they are not currently recognised as binding contracts and are not enforceable.

The divorce courts can however take into account “any other matter which in the circumstances of the case the court may consider relevant” and this now includes a pre-nuptial agreement, provided that by doing so the interests of the children are not compromised. 

In 2014, following a particularly controversial case involving a pre-nuptial agreement, the Law Commission which advises upon statutory law recommended that these agreements should become legally binding subject to stringent qualifications. One requirement is that at the time of signing both parties must disclose material information about their financial situation and have received legal independent legal advice.

A further restriction, under the commission's proposals, is that agreements would only be enforceable "after both partner's financial needs, and any financial responsibilities towards children, have been met".

The report states: "It will remain open to spouses to make agreements about financial needs, but such terms will not be contractually enforceable and will be subject to the courts' scrutiny for fairness as they are at present. A qualifying nuptial agreement will not remove the parties' ability to apply for, and the courts' jurisdiction to make, financial orders to meet their financial needs."

The change would match the practice in other European jurisdictions where contracts relating to ownership of property are common "but where it is not possible to contract out of the courts' jurisdiction to decide issues of maintenance" payments.

Introducing prenuptial agreements without protection of the parties' needs "would be very damaging", the commission warns. That key proviso suggests legal disputes over the fairness of maintenance payments and financial needs would still have to be brought before courts.

Prenuptial agreements are likely to remain of greater relevance to the wealthy where financial assets significantly exceed lifetime maintenance needs, which include requirements for housing, childcare, education and income.

The commission has called on the Family Justice Council, whose members include judges and lawyers, to produce "authoritative guidance on financial needs" to enable couples to reach an agreement that recognises their financial responsibilities to each other.

The Law Commission's proposals will be sent to the Ministry of Justice, which will examine whether it wishes to draw up legislation on the basis of the suggestions. Past governments have shown reluctance to revise marriage laws.

It looks like the UK is moving towards limited recognition of these Agreements but it is no good couples agreeing to sign up to these without proper disclosure of assets and transparent and independent legal advice as to the content of the Agreement.  In addition the court is only likely to take notice of the Pre-nuptial agreement where the marriage is childless and has broken down within a year or two.

To ensure as far as it is possible that your pre-nuptial agreement is enforceable, it is vital that both parties get independent advice upon the terms of the agreement.  This can cost up to £750 per person.  At Temple we can arrange this service for you at competitive rates with the correct expertise. 

 

Please Note: This document is for general information only. It is not legal advice and should not be acted or relied on as being so. It does not create a solicitor-client relationship between Temple Legal Solutions Ltd and any other person. Legal advice should be taken before applying any information in this document to any facts and circumstance.

If you contact Temple Legal Solutions or call 01483 514814 to make an initial enquiry, you will then referred to an appropriate, experienced law firm.