Should Pre-Nuptial Agreements become legally binding?

Michael Sheville looks at the recent report on whether Pre-Nuptial Agreements should be legally binding.

Pre-Nuptial Agreements, which have been common place in America and most European countries for many years, may soon become legally binding in England and Wales following a report published by the Law Commission on 27 February 2014 entitled “Matrimonial Property Needs and Agreements”.

The report arises out of the Law Commission’s project to examine the status of enforceability of matrimonial property agreements which include Pre-Nuptial Agreements.

Definition and history

‘Pre-Nuptial Agreement’ can be defined as a contract entered into by two people who are about to marry setting out the terms of possession of their assets and determine the ownership of property, whether owned prior to the marriage or acquired after the marriage in the event that marriage is later dissolved.

Historically, Pre-Nuptial Agreements have not been binding in England and Wales although the Court have, with increasing force, been upholding the terms of these agreements.

A landmark ruling was given by the Supreme Court in the case of Radmacher -v Granatino in 2010. The effect of that case is that Pre-Nuptial Agreements which have been freely entered into and where the parties have a full understanding of their implications will be upheld unless it would be unfair to hold the parties to it.

There is, however, no Act of Parliament which says that such agreements are legally binding. This means that for now, every case will be dealt with by the Courts on its on facts.

Report recommendations

The Law Commission has recommended that “qualifying nuptial agreements” would be enforceable contracts. In order for an agreement to be a qualifying nuptial agreement certain protective safeguards would have to be met. These documents could not, however, be used by parties to contract out of their right to meet the financial needs of each other and the children.

Michael Sheville, a Partner in our Family Team provides some advice below:

The passing of an Act of Parliament to make Pre Nuptual Agreements binding and which establishes statutory guidelines as to when such agreements are legally binding will reduce any uncertainty that couples may have about the enforceability of such agreements when they are entered into.

Pre-Nuptial Agreements will not be right for everyone but for those who wish to enter into such an Agreement the certainty of knowing it will be enforced in the event that their marriage breaks down which can only be a positive evolution of the law and will give statutory recognition to the Supreme Courts ruling.

Couples wishing to enter into such an agreement should seek independent legal advice some time before they intend to marry. This will allow adequate time for the Agreement to be discussed between them and for them both to be satisfied that they are entering into the Agreement freely.

Not yet enforceable

It is important to remember that Pre-Nuptial Agreements have not yet been made enforceable by statute and if they are, they are likely to be more attractive to those entering into marriage with substantial assets acquired before meeting their future spouse. Additionally people entering into second or third marriages wishing to preserve pre-existing assets for the benefit of children they have had from earlier relationships may find such agreements to be an attractive option.

At Pinney Talfourd we have a large team of matrimonial solicitors who are experienced in drafting and advising clients on Pre-Nuptial Agreement as well as Post-Nuptial Agreements.

More Information

For more information on Pre-Nuptial Agreements please contact Michael and his team.

This article was written by Michael Sheville, a Partner in our Family Team. This article is only intended to provide a general summary and does not constitute legal advice. Specific legal advice should be taken on each individual matter. This article is based on the law as at March 2014.