Pre-Nup Thumbs Up

When entering into a marriage or civil partnership, people may wish to ring-fence assets they have acquired previously, in order to prevent their inclusion in a divorce settlement should the relationship fail.

Whilst the current position is that pre-nuptial agreements are not, in essence, binding or legally enforceable in UK law, they have increasingly had more influence as the courts accept that they are indications of a couple’s intentions at the outset of their relationship and more and more couples are signing them.

The much-publicised Supreme Court decision in Radmacher v Granatino  marked a turning point in this regard, since when  ‘pre-nups’ have generally been upheld by the English courts, provided they have been entered into with appropriate safeguards in place, such as independent legal advice having been taken by both sides.

In a recent case, however, the High Court refused to uphold a pre-nuptial agreement entered into by a city lawyer and his wife-to-be on the day before their wedding.

Following hard upon this decision, the Law Commission has introduced proposals for such agreements to become binding in future.

In the absence of any agreement to the contrary, English law assumes that ‘matrimonial property’ (property or wealth generated during the marriage) is to be shared equally. That assumption does not apply to ‘non-matrimonial property’, for example any inheritance received or wealth brought into the marriage by one party. However, the law gives the courts a wide discretion to make appropriate financial orders to meet the parties’ financial needs.

The Law Commission has now produced a Report called “Matrimonial Property, Needs and Agreements” which sets out proposals that pre-nups and post-nuptial agreements should be made legally binding by the creation of appropriate statute to provide for ‘qualifying nuptial agreements’.

Shaun Underhill, a Partner at Winchester law firm Shentons, explains that qualifying nuptial agreements are likely to be particularly useful in two situations.

“Firstly, they will be an important source of legal certainty for high net worth couples who want to make clear and reliable arrangements as regards their wealth, for example as a way of protecting an inheritance from being shared on divorce or dissolution. Secondly, they will be useful where the parties to a marriage or civil partnership have been in a relationship before and wish to safeguard a house or other assets for their children from that relationship.”

For advice on marriage dissolution and the protection of family assets, contact Shentons’ Family Department.