With the summer approaching, the wedding season will soon be upon us. As the concept of what makes a perfect wedding changes so has the approach of couples towards their finances and for many a pre-wedding checklist now contains the item “organise a pre-nuptial agreement”.
Pre-nuptial agreements are often viewed as unromantic, however another way of viewing them is similar to taking out critical illness insurance, maybe an unpleasant and hopefully unnecessary purchase, but useful to have in place should the worst happen. Unfortunately, marriages sometimes do end, so entering into an agreement in such a situation could protect you and your partner from significant financial and emotional stress should this sadly happen.
A common misconception is that a pre-nuptial agreement is only for the extraordinarily wealthy or celebrities, however they can be useful for any married couple who have financial assets. There are certain situations where you would be strongly advised to enter into an agreement, for example where there are substantial assets, if you have been previously married and own your own property which you may wish to protect for your children in the future, if you are marrying and are financially independent, if there are international elements to the marriage or if one party has substantial debts.
Pre-nuptial agreements in the UK
A pre-nuptial agreement is a written contract a couple enter into prior to their union, often referred to as a “pre-nup”. The agreement is designed to set out ownership of the parties’ assets, rights regarding joint assets including property, income, debt and inheritance and how they will be divided if separation occurs.
The most important case in recent times with respect to pre-nuptial agreements is that of Radmacher v Granatino, in which precedent was set that such agreements are to be afforded significant evidential weight unless they are considered to be unfair.
In short, Radmacher involved a German heiress and French investment banker. The parties entered into an agreement to state that neither party would benefit financially if the marriage ended, to help the heiress (Radmacher) protect her £106million fortune. The court found in favour of Radmacher and hence a ground breaking decision was made that recognised for the first time the enforceability of a pre-nuptial agreement under English law. An agreement can still however be waived if it is deemed to be unfair.
Without a pre-nuptial agreement the starting point for the division of property and assets will generally be equality of assets between both parties. While this is generally the fairest distribution of assets they may be reasons why this may seem unjust in a particular situation and hence a pre-nuptial agreement could be crucial for you.
Pre-nuptial agreement requirements
When considering if an agreement is fair and should be upheld, the court will look for certain conditions when the agreement was entered into. Below is a list of important requirements to ensure the agreement has the best chance of being upheld in a divorce court:-
- Each party understood the nature of the agreement
- Each party obtained independent legal advice
- Both parties signed the agreement free from coercion and pressure
- There was full financial disclosure of the financial position of both parties
- The agreement was signed in advance of the marriage with time for the parties to carefully consider the agreement, preferably no later than 28 days before a marriage, referred to as a “cooling off” period
- Would it be an injustice if the pre-nuptial agreement were upheld or not upheld?
The recent case of the hotel concierge and the Avon heiress
It is important to take legal advice about the terms of a pre-nuptial agreement to ensure they are appropriate to your circumstances and meet the above requirements. In a recent case of a hotel concierge (Anil Ipekci) and Avon heiress (Morgan McConnell), the court did not uphold an agreement signed just two weeks before the marriage and deemed it would have been “wholly unfair” on Mr Ipekci if the agreement had been upheld.
The court awarded Mr Ipekci a lump sum of £1.3million after a judge ruled the agreement, which said he was entitled to a half share in any increase in the value of three properties owned by Ms McConnell, was “wholly unfair” when there had been no increase in the value of the properties as it left him with nothing.
The decision as to whether to enter into a pre-nuptial agreement is clearly a very personal one and should be made jointly with your partner without any pressure or persuasion from either party. If the decision is made to enter into an agreement, Stephensons have a team of specialist solicitors with experience in this field, who would be pleased to guide and assist you throughout the process. Call us now on 0175 321 6399.