Pre-Nuptial Agreements
Dated: 30/10/2008
A pre-nuptial agreement is an agreement made by a couple before they marry specifying how their assets are to be divided in the event that they divorce.
Pre nups can be used
(i) by wealthy people or people with wealthy families. They are particularly relevant if there is substantial disparity between the parties either in terms of assets or earning capacity.
(ii) where personal circumstances are not straightforward; for example where there are children of previous relationships and a balance needs to be agreed between the expectations and fair interests of those children and new spouse.
(iii) by ordinary clients who have their own clear views which they want to govern their circumstances rather than leaving matters to the courts.
Legally speaking pre-nuptial agreements are gaining in influence if they are properly negotiated and drafted. The courts treat them as persuasive evidence rather than binding in all circumstances. See the case below where Mrs Crossley was ‘persuaded’, probably by legal advice from her own solicitors.
The use of a pre-nuptial agreement can be worth consideration.
The judge in a leading case on the subject has most helpfully suggested a number of criteria which would assist the courts in deciding whether or not a pre-nup should be regarded as enforceable or persuasive
The most important of these from the perspective of the parties to a pre-nup are:
· does the party being asked to sign the pre-nup understand it?
· has he or she been properly advised as to its terms?
· was pressure exerted by one party to make the other sign?
· was there full disclosure of the relevant assets?
· was pressure exerted by anyone else to make them sign?
· was the agreement signed willingly?
· did one party exploit a dominant position?
· was the agreement entered into in the knowledge that there would be a child?
· has any unforeseen circumstance arisen which would make enforcing the pre-nup unjust?
· does the order preclude the payment of any periodical payment for maintenance and if so, would it be unjust to hold the parties to that agreement?
· are there grounds for believing that upholding the agreement would be unjust?
For a pre-nup to achieve the desired object, it must be properly drafted and put into place in the correct circumstances. In particular, both parties to it should have the benefit of independent legal advice.
In a case reported in February ‘08 thrice-divorced Susan Crossley abandoned her claim to a share of the fortune of her property developer fourth husband Stuart after their 14-month marriage broke up. Mrs Crossley had received £18 million in divorce settlements from her previous husbands. Prior to her marriage to Mr Crossley, she had signed a pre-nuptial agreement stating that in the event of the failure of their marriage, she would receive nothing. Hours before a scheduled hearing at the High Court, Mrs Crossley abandoned her claim, accepting that she had little or no chance of persuading the Court that the pre-nuptial agreement was invalid.
Mrs Crossley had claimed that the agreement was invalid because her husband, whose wealth is estimated at £45 million, had not disclosed to her ‘tens of millions’ of pounds held in offshore accounts. In an earlier hearing, however, the Court of Appeal ruled that the pre-nuptial agreement should be considered by the Court before looking at any other claim Mrs Crossley might have.
Contact Mike Dyer on 0121 693 2222 for advice on family and wealth preservation matters.