pre-nuptial agreements: unromantic or a necessity in the modern
world?
pre-nuptial agreements: legally binding or not?
Young Asian professionals are reaching higher heights than ever
within their careers and marrying later in life than previous
generations. With divorce being less of a taboo within Asian
society than ever before, Irpreet
Kohli, a Family law solicitor in Blake
Lapthorn's London
office, discusses the current legal position of pre-nuptial
agreements in the UK.
Pre-nuptial agreements, also referred to as
pre-marital agreements or contracts, are not only a necessity for
the rich and famous. There has been a marked increased in the
number of enquiries regarding pre-nuptials, spurred on, no doubt,
by the media reporting high profile cases such as the barrister who
was made to make a large lump sum payment to his first wife from
many years before and the city professional who attempted to return
to court because his divorce settlement was based on him having
assets substantially higher than the reality in light of the
economic conditions.
As a result of the public divorces and the widely reported
cases, more ordinary couples are beginning to wise up to the
benefits of having a pre-nuptial agreement, particularly when an
increasing number of Asian marriages, whether arranged or
‘assisted’, are ending in divorce.
There are number of reasons for the rise in enquiries about
pre-nuptial agreements. Firstly, individuals are dedicating more
time and effort to their work, with careers being given priority
over marriage. So when these individuals do marry, they have often
amassed an asset portfolio that they want to protect in the event
of the marriage failing.
Secondly, whilst pre-nuptials were previously essentially
unenforceable in the UK courts, there is a real consensus
throughout the legal profession that the UK needs to catch up with
other countries worldwide and recognise the rights of educated and
capable individuals to regulate how their finances should be dealt
with at a later stge.
In 2005, Resolution (an established national organisation of
family lawyers) published a policy document, which recommended that
pre-nuptial agreements should become legally binding and
enforceable. These calls have been echoed and supported by the
courts through recent cases dealing with pre-nuptials. At the time
of writing, the legal profession is awaiting a Court of Appeal case
involving pre-nuptials, which may change the position going
forward.
so what exactly is the current position of a pre-nuptial
agreement?
Within the proceedings dealing with the financial aspects of a
separation, the courts must consider a list of criteria when
deciding what an appropriate financial settlement should be. These
include the length of the marriage, the parties' ages and their
financial resources, responsibilities and requirements. They are
also able to consider relevant 'conduct' of the parties. This
relates only to financial conduct and it is under this heading that
courts may consider the existence of a pre-nuptial agreement if
they deem it appropriate.
The key point is that it is only one of a number of factors and
is by no means a compulsory consideration or one that the court is
required to give priority and/or consideration to.
What is the best way therefore to ensure that your pre-nuptial
agreement holds as much weight as possible with the court?
The first thing to ensure is that you meet as many of the
standard safeguards as possible. If you want your pre-nuptial
agreement to stand, you must eliminate any possible arguments for
it not being enforceable in the future.
Both of you should get legal advice from your own independent
and experienced solicitors. Do not think that a pre-nuptial
agreement can simply be drawn up by a legally able friend. Instruct
a reputable family solicitor who is used to dealing with
pre-nuptials and who can properly advise you and record the advice
given as it is highly likely that those records will be called upon
at a later stage.
Both of you should provide full financial disclosure of your
assets to the other party so that any agreement is made with
sufficient knowledge of the other’s position. Failing to do this
would mean that your agreement could be overturned on the basis
that there was misrepresentation by you and that the agreement was
entered into on a false understanding of what the assets were.
Your agreement should be recorded in writing and signed by you
both in front of witnesses and be supported by full records and
notes of the advice given by your respective solicitors. It should
be signed as far in advance of the wedding as possible. Given the
costs and lengthy celebrations involved with Asian weddings, I
advise to finalise an agreement ideally three months before the
wedding to avoid a later argument that one party felt coerced into
signing the agreement due to the proximity and potentially wasted
costs of the wedding.
Most importantly, when negotiating the terms of your pre-nuptial
agreement, be sensible. Whilst they have discretion to do so, the
courts are simply not going to approve an inherently unfair
agreement so consider which particular assets you want to preserve
and take advice on what the appropriate settlement would be in
relation to the other assets you both have or will acquire during
your marriage. Your legal adviser will advise you as to what is
sensible depending on your particular circumstances.
Recommendations have been made that, in the interests of
fairness, certain situations should render a pre-nuptial agreement
unenforceable. These include when a child has been born to the
couple, although if the child was alive at the time of the
agreement and/or sensible provision has been made, there may be an
argument that the pre-nuptial should stand, or at the very least,
limit a party's entitlement. Other circumstances include where
either party has not received appropriate legal advice, where the
terms of the contract are considered generally unenforceable, where
the agreement is made very close to the wedding and where a party
has not declared all their assets.
Considering the safeguards mentioned above, it is clear that the
purpose is to avoid one of the above scenarios.
Pre-nuptial agreements may be particularly helpful and are more
likely to be enforced in certain types of cases, such as:
- second marriages where one or both parties have been married
before and wish to be cautious second time around
- where the parties' position at the time of the pre-nuptial
agreement and at the time of separation have not significantly
changed
- with middle-aged couples who have spent their lives building up
their assets and now wish to protect them before they marry.
As highlighted by recent cases, in circumstances where the
parties have a strong connection to a country where pre-nuptial
agreements are enforceable, the courts are more willing to give
weight to the content of the agreement.
Consider a pre-nuptial agreement to be like insurance: it is not
because you know, want or expect your marriage to fail but it is
there to protect you in case it does. If you have assets that you
wish to protect into the future or are concerned that you have been
asked to enter into a pre-nuptial agreement before you get married,
seek legal advice and check your position.
With the uncertainty that is often felt within Asian arranged
marriages, and given the rising divorce levels amongst the Asian
community, it would be remiss of any individual with sufficient
wealth to not properly consider protecting their assets by
tactfully suggesting a pre-nuptial agreement that may ultimately
protect both parties in the future. It may not be romantic or
idyllic but once the rose tinted glasses come off and you realise
that you may end up spending around £50,000 arguing about your
assets if your relationship breaks down, pre-emptive thought and
planning do not seem like such optional considerations after
all.
