Your wedding has been postponed. Should you still press ahead with your Pre- Nuptial Agreement?
In this blog, Mariko Wilson, Senior Associate at FLiP, explains how Pre-Nuptial Agreements work and the protection they can offer. She also considers whether you should press ahead with negotiating your Pre Nup despite your wedding plans being on hold due to the pandemic.
The term “nuptial agreements” refers to both pre-nuptial and post-nuptial agreements. Both pre-nuptial and post-nuptial agreements are documents which seek to regulate the division of assets between parties to a marriage upon any subsequent divorce.
But what happens if your wedding plans have been struck down by the Covid-19 pandemic? Should you also shelve plans for your Pre-Nuptial Agreement?
Why have a Nuptial Agreement?
In an attempt to introduce an element of certainty (and to protect the wealthier party) nuptial agreements are now commonly entered into. Such agreements are not binding under English law (as the English Family Court believes it should retain the right to make the final decision regarding the division of assets at its discretion, taking into account all relevant circumstances). The Law Commission did, however, publish a report on nuptial agreements (on 27 February 2014) recommending that subject to certain formalities being complied with, nuptial agreements should be enforceable on the proviso that both parties’ needs are met.
Current Status of Nuptial Agreements
While Nuptial Agreements are not binding under English Law the weight which the Court will attach to them upon divorce increased significantly following the Supreme Court case of Radmacher v Granatino .
In Radmacher, the German heiress Katrin Radmacher was ultimately successful in the Supreme Court in upholding the major terms of a German pre-nuptial agreement to preserve her considerable wealth (of around £100 million) on divorce. The pre-nuptial agreement in this case provided for Mr Granatino (who was French) to receive nothing in the event of a divorce. Rather than sticking to the terms of the pre-nuptial agreement in full, the English Court awarded Mr Granatino a house held on trust (to revert back to Ms Radmacher upon the children completing tertiary education) and a £1 million income fund. In this case the Court held that “the Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.” The status of nuptial agreements was significantly enhanced by Radmacher v Granatino and the great many other cases which have subsequently followed it.
Nuptial agreements are recommended in situations where one or both spouses wish to protect their wealth (and/or expectation of greater future wealth) in the event of a divorce. This is particularly the case as the English Family Court’s approach to inherited/pre-acquired assets and family gifts is not entirely settled and such assets will not automatically be excluded from division on divorce. In the absence of a pre/post-nuptial agreement, and after a long marriage, the Court will generally take as its starting point the equal division of assets on divorce, subject to arguments regarding the provenance of those assets.
In order for nuptial agreement to have the best chance of being upheld certain safeguards should be adhered to. These apply to pre and post nuptial agreements (save for 3) below which only applies to pre-nuptial agreements):
- There should be full financial disclosure by each party of any assets they currently have, any interests they have in trusts or other such arrangements, and any expectation of future wealth/inheritance.
- Both parties should receive independent legal advice as to the effect of the nuptial agreement which usually includes “education” as to their potential entitlement under English law on divorce if they did not have a nuptial agreement.
- In relation to Pre-Nuptial Agreements only, the agreement should be signed at least 4 weeks before the date of any marriage.
Our wedding plans have been put on hold as a result of Covid-19. Should we still press ahead with our Pre- Nuptial Agreement?
One of the many mistakes that family lawyers, like me, see time and again is the Pre-Nuptial Agreement being dealt with as an after-thought in last minute wedding preparations. Many people wrongly assume that a Pre-Nuptial Agreement is a standard document that can be printed off, “checked” and signed and so they don’t contact a family lawyer until shortly before the wedding.
In reality, Nuptial Agreements are bespoke and often substantial documents upon which expert legal advice is required. Negotiations regarding a Pre-Nuptial Agreement can take many weeks and as a minimum, negotiations should begin 4 months before the date of any proposed marriage.
The reason for this is threefold:
- To ensure that the Pre-Nuptial Agreement is signed at least 4 weeks before the wedding;
- To enable the parties to engage with the right legal advisers – the negotiation of a Pre-Nuptial Agreement can be emotive and often takes place at what should be a period of great joy. Discussions need to be handled with tact and sensitivity as well as realism.
- To avoid negotiations around the Pre-Nuptial Agreement becoming the dominating feature in the weeks leading up to the marriage. Nothing kills the joy in the lead up to a wedding like stressful, last minute discussions about divorce! The 4 week minimum is just that, a minimum. The ideal would be to have the Pre Nuptial Agreement executed and stored well before the build up to the wedding is in full swing, so that such festivities can be enjoyed without the distraction of legal negotiations.
So if your wedding has been postponed, why not use the additional time that you have been given to iron out the details of your Pre-Nuptial Agreement, so that when your big day is finally on the horizon, you can look forward to it safe in the knowledge that the legalities have been dealt with and your Pre Nupital Agreement is already tucked away in a drawer from which it will hopefully never emerge.
It is particularly important, however, that it is clear when your Pre Nuptial Agreement will come into effect. Usually a Pre-Nuptial Agreement will say that it comes into effect upon the marriage of the parties on “X” date (as the date has usually already been set).
If you have pushed your wedding back to a specified date in the future, you can insert the new date in your Agreement though it is often advisable to have a fall back position of (say) six months just in case it has to be postponed further for any reason (so the Agreement will come into effect upon your marriage “whether on “X” date or within 6 months thereafter”).
If you have postponed but not yet set a new date, you could specify that the Agreement will come into effect upon your marriage provided that the wedding takes place within 6 (or 12) months of the date of the Agreement. If the wedding is delayed for longer than a period of around twelve months after signing the Agreement for any reason, it would be prudent to enter into a supplemental Agreement explaining the reason for the additional delay, to update the Agreement if needed (if any circumstances have changed in the interim) and to reaffirm the terms agreed.
This need not be an expensive, stressful or time consuming process – indeed it should be very straight forward as the heavy lifting has already been done.
If you would like to learn more about pre-nuptial or post nuptial agreements, please contact any of our expert family and divorce lawyers on T: 020 7420 5000 or E: firstname.lastname@example.org. In addition you can also visit our dedicated Pre and Post Nuptial Agreement website page here.
Mariko Wilson is a Senior Associate at Family Law in Partnership. She handles all aspects of private family law and has a broad range of experience, frequently acting for high net worth individuals in financial relief and divorce proceedings as well as acting in children matters.