Family - Do pre-nuptial agreements work?

Although not legally binding pre and post nuptial agreements may be upheld if drafted and executed carefully

Do pre-nuptial agreements work?
Prenuptial agreements are growing in popularity however, as the law currently stands, prenuptial and postnuptial agreements are not legally binding under English law.
While we await legislative clarification on the position of prenuptial agreements we summarise their current legal standing in England & Wales:

What is a prenuptial agreement and should I have one?
There is no specific legislation about prenuptial agreements, so their status has been determined by case law – most notably in the landmark Supreme Court case of Radmacher v Granatino.
As above, they are not currently legally binding however, if drafted and executed carefully they should be upheld in the event of a later dispute. Such agreements are drafted usually to protect pre-marital assets, inheritances, or for some the priority is having certainty.
The above case law outlined various steps that can be taken to improve the chances of a prenuptial agreement being binding on the couple:
1. The agreement must be freely entered into;
2. The parties must have a full appreciation of the implications of the agreement; and
3. It must not be unfair to hold the parties to their agreement in the circumstances prevailing.
The Supreme Court has confirmed that the concept of fairness in financial remedy applications follows three principles: need, compensation and sharing. The very existence of a prenuptial agreement is capable of altering what is seen as fair in the circumstances.
It will not be seen as fair to allow a prenuptial agreement to prejudice the reasonable requirements of a child of the family. That being said, the autonomy of the individuals who entered into the agreement should also be respected, and the courts have held that there is nothing inherently unfair about an agreement which seeks to ring-fence non-matrimonial property.

Advantages and disadvantages of having a prenuptial agreement
A pre-nuptial agreement can give more certainty as to financial arrangements in the event that you divorce. If the agreement has the above three factors included then it can be an effective way to protect assets that you may have had prior to the marriage, particularly if you, for example, wish to protect assets for the purpose of an inheritance for any children of a prior marriage or relationship.
It is important the remember that the court retains overall discretion in the event of a divorce and therefore entering into a prenuptial agreement can have the effect of creating a false sense of security as to what may happen if you were to divorce.
Entering into an agreement that is unfair to one party makes little sense as in those circumstances, the court is likely to find that the agreement is “unfair” and should not be upheld. In addition, circumstances can change and the court will look at your circumstances at the time of the agreement in comparison to the time they are dealing with the issue and if the agreement has not provided for an eventuality that has occurred, such as having children, there is scope for the court to find the agreement should not be upheld.

If you are interested in discussing prenuptial or postnuptial agreements, please contact our specialist Family Team today on 01932 234 500.