It has been a decade since the landmark decision of the Supreme Court in Radmacher v Granatino changed the law on prenuptial agreements. With the average marriage lasting 12.3 years (according to the Office for National Statistics) we are beginning to see more divorce proceedings featuring prenuptial agreements.
Enforcing a prenuptial agreement during divorce
A prenuptial agreement must adhere to certain rules if it is to be enforceable. Those drafted in the years following the Radmacher case typically contain clauses recording:
- The parties understanding of the terms, an acknowledgement that the terms were reasonable and a statement of their intention to be bound by the agreement in future.
- That they each knew about the other’s assets and income and the potential rights and assets they were each relinquishing/preserving;
- An acknowledgement of independent advice and no pressure to sign;
- The assets which each party agreed to be ‘Separate Property’ and those which they considered to be ‘Marital property’;
- An acknowledgement that the courts retain jurisdiction to determine financial settlements on divorce to the extent that the agreement might later be regarded as unfair;
- The couple and their legal advisers will have signed the agreement in recognition of these matters.
Prenuptial agreements and divorce
A lot can change during the course of a marriage and one spouse may feel that it is no longer fair or there may be children whose existence or needs were not considered at the time of drafting.
Here are some of things to consider when beginning divorce proceedings involving a prenup:
- Revisit your prenup
Read through your prenup. You should have your own copy, but if not, ask your lawyer for it. You won’t be able to pick and choose the bits you want to rely on. Remind yourself of the entire content and its overall terms and effect.
- Think back to the circumstances in which you signed the prenuptial agreement
Can you remember where, when and how you negotiated and signed the prenuptial agreement? Whose idea was it? Was there any pressure or is that likely to be alleged? What did you each want to achieve and why? Does your prenup have a review clause? Did you discuss or review the terms of the prenup during the marriage? If so what did you decide? If not, why not?
- What has changed?
Life does not stand still and what was fair then, may not be fair now. What has happened since that may be relevant? Have you had children since signing the prenup? Are you both in good health? Have you or your spouse made or lost a significant amount of money during this period? Has one of you had an inheritance? All these points are important to consider.
- What happens next
If the party wishing to uphold the prenup is confident about his or her case, they are likely to issue an application to shorten the usual process by asking the court to uphold the agreement. The law also requires the court to look at your respective incomes, property, financial needs, obligations and responsibilities, the standard of living in the marriage, your ages, health, contributions and pension rights. The court cannot ignore these factors, but if it regards the prenup as being “of magnetic importance”, it may simply uphold the agreement, having considered how it fits into the above factors, bringing the process to a swift and relatively painless conclusion. This possibility is the strongest argument for having a professionally prepared prenup which anticipates the future and meets all the requirements to ensure that it cannot be easily ignored. Conversely, a poorly prepared and ill thought out document is likely to polarise views and add to the expense and uncertainty. If the court cannot be persuaded that the agreement should be upheld entirely, it will be considered along with all the other factors as part of the usual process, potentially at a final hearing.
- Keep communicating! – An important part of the formal court process is a mediation meeting known as a Financial Dispute Resolution appointment. The parties and their representatives must attend court and be willing to negotiate, with the help of a judge, who will give an indication as to what they believe will be a fair outcome. Make sure you communicate positively during this meeting. The existence of a professionally prepared prenup is significant on these occasions and will affect the negotiations.
- Don’t be opposed to compromise – It can be hard during divorce to remain objective with so many emotions flying round, but the reality is that ongoing disputes become expensive, even those involving a prenup, unless it can be convincingly argued that the prenup should be upheld in its entirety. Even with a good prenup, it is generally rare that you get everything you want, so try and work out what is really important to you and be prepared to compromise on the smaller stuff. If you spend more on a technical point then the item you’ve secured cost is it really worth it?
Done properly pre and post nuptial agreements are becoming a good way of working out how you both want to organise your finances after you marry and what you want to happen if things go wrong. As the saying goes; “plan for the worst hope for the best”. Here’s hoping your prenuptial agreement remains gathering dust in a drawer but if you do need to speak to someone about prenuptial agreements and divorce please do get in touch.