On divorce the court has very wide discretionary powers to distribute family assets as they see fit, in accordance with the Matrimonial Causes Act 1973, so as to bring about fairness between the couple. All the assets of the marriage; whether in the sole name of one or other of the spouses or joint names and whether acquired before, during or after the marriage are susceptible to the court’s discretionary jurisdiction. Couples have therefore often turned to prenuptial agreements to assist with the division of marital assets following the breakdown of a marriage.
Are they legally enforceable?
Whilst many jurisdictions recognise prenuptial agreements, In England and Wales, they are not strictly enforceable unlike a legally binding contract. Despite the inability to enforce the agreement, prenuptial agreements have become common in the UK, so much so, that the Law Commission of England and Wales has spent extensive time and effort in reviewing the matter. They danced with the idea of recommending that they be made enforceable the same way contracts are enforceable, without being subject to the courts assessment of fairness.
Many welcomed the idea of an introduction of a tool that offered more control and predictability. However, this support was met with arguments of those who value the sanctity of marriage and argued that to allow prenuptial agreements to be enforceable risked an admission that the couple agrees that the marriage will fail. Their views are that marriage is for life and the contemplation of the thought of separation or divorce, is overwhelming.
What needs to be in place in order for a prenuptial agreement to qualify as legally enforceable?
The Law Commission released it’s paper in February 2014 called ‘Matrimonial property, needs and agreements’ which suggestsfive formal requirements that must be satisfied in order for a prenuptial agreement to qualify.
(a) the agreement must be contractually valid;
(b) it must contain a statement signed by both parties that he or she understands that the agreement is a qualifying nuptial agreement that will partially remove the court’s discretion to make financial orders;
(c) the agreement must not have been made within the 28 days immediately before the wedding or the celebration of civil partnership;
(d) that both parties to the agreement must have received, at the time of the making of the agreement, disclosure of marital information about the other party’s financial situation; and
(e) both parties must have received legal advice at the time the agreement was formed.
If these qualifying prenups are placed into Legislation and become law this would mean that marital agreements freely entered into with a full understanding of the implications will be upheld by the court, unless it would be unfair to do so. Whilst couples cannot enter into enforceable agreements that deal irrevocably with future needs for housing, childcare, and income or any other aspect of financial needs, the old rule that prenuptial agreements are void as contrary to public policy is being swept away.
Prenuptial Agreements are not just for the rich who wish to safe guard their wealth. There are couples who marry late, having already built their assets and wish to leave to other members of their family. There are those who have children from previous relationships or those who wish to protect inherited assets. Anyone who wishes to have agreed certainty on the breakdown of a marriage or civil partnership should consider entering into a qualifying prenuptial agreement.
If you are interested in talking about an existing agreement you have in place, or would like to discuss putting one in place – please feel free to call me on 01604 828 282 , or comment below with any questions you have right now.