Pre-nuptial agreements – are they enforceable?

A pre-nuptial agreement, otherwise known as a ‘pre-nup’, is a formal written document which is entered into by both parties prior to their marriage. The agreement sets out the ownership of the parties’ belongings (assets, property, money) and how they will be divided in the event of marriage breakdown.

Section 25(1) Matrimonial Causes Act (MCA) 1973 requires that when considering financial remedies following the breakdown of a marriage, the Court must take into account all circumstances of the case, including the existence of any pre-nuptial agreement.

Pre-nuptial agreements are not legally binding documents but will be given effect to if the following criteria, as set out in Radmacher v Granatino, is met:

  1. The agreement was freely entered into;
  2. There was full appreciation of its implications;
  3. There was full and frank disclosure;
  4. Unless it would not be fair to hold the parties to the agreement.

Under s25(1) MCA, the needs of any children of the family are paramount and their needs should always be considered first. A pre-nuptial agreement will not be upheld if it prejudices the reasonable requirements of any child of the family.

Each of the Radmacher principles can be considered in turn:

The agreement must be freely entered into

The parties must enter into the agreement of their own free-will, without duress or undue pressure.

Full appreciation of its implications

The parties must have access to and be aware of all information in relation to the agreement. The best evidence for this is that both parties obtained independent legal advice at the time the agreement was made. This enables the parties to have had the implications of the agreement explained to them with each of their solicitors ensuring that they have a full understanding of its contents.

Full and frank disclosure

Radmacher states that the question to be asked is whether there has been a material lack of disclosure. While full and frank disclosure is always desirable, it is not always necessary, as long as the parties are fully aware of the implications of the agreement.

Fairness

This element is the least certain and is somewhat ambiguous as it involves a weighing up exercise regarding all aspects of the marriage. However, Radmacher does provide guidance of when an agreement is likely to be fair.

The longer a marriage lasts following a pre-nuptial agreement being signed, the greater the chance that it may not be fair to hold the parties to its terms. This is because of the likelihood of unforeseen changes in circumstances.

If at the time of signing the agreement, the parties do not envisage having children and as a result, the agreement makes no provision for children, but they later do have children, it would not be fair to allow an agreement to prejudice the reasonable requirements of any child of the family and would be highly unlikely to be enforceable.

The impact of the agreement on the finances of the parties is also of paramount importance when considering fairness. If the agreement were to cause a significant disparity in the equality of the distribution of finances, for example leaving one party with a significant deficit each month whilst the other has a significant surplus, this would also be seen as unfair.

It is important when considering a pre-nuptial agreement, that both parties have enough time to properly consider the agreement and understand its terms. The agreement must be entered into at least 21 days before the marriage, however it is recommended that it is organised well in advance.

If you are considering the possibility of entering into a pre-nuptial agreement, please contact a member of our Family team who will be able to assist you.

Clare Wilkie