Pre-Nuptial or No-Nuptial

Pre-Nuptial or No-Nuptial

The prime motivation behind getting a pre-nuptial agreement after protecting a family asset is simply to make sure that in the event of a divorce things go smoothly and all the fuss is taken out of the divorce process. However, there is perhaps not enough thought given to the actual process of getting the pre-nuptial agreement in the first place, the difficulties it may involve and the stress it may place on a relationship.

The initial difficulty for the lawyer with a client looking for a pre-nuptial agreement is setting out the law. This area is still in a state of flux following the changes brought by Radmacher v Granatino [2010] UKSC 42 which first gave some recognition to the idea of a pre-nuptial agreement, and the cases that have come in the three years since. The lawyer has to strike a balance between on the one hand reassuring the client that they are being protected to the extent of the law, and on the other hand making the client aware that they cannot and should not attempt to procure an agreement from their fiancée which is unfair and does not include adequate provision for them in the event of a divorce. This is because of the balance between respecting a couple’s right to make an agreement, and requiring an agreement to be fair to both parties in the event of a divorce. This lack of certainty in the law means as ever it is important to have a good lawyer, very preferably a Resolution member, representing both parties. With two sensible lawyers working on an agreement together from both sides they can draft something that is fair enough to both parties to be allowed to stand in any divorce.

Whereas in the rarefied atmosphere of heiresses and city bankers that Radmacher took place it was possible for Ms Radmacher to sign an agreement to pay off Mr Granatino with a few million quid, that option will not be available to most ordinary clients, who may have one family home and perhaps some savings or pension assets. They will therefore have to think much harder about what they may be able to afford, and what they may have to give up or leave unprotected. The client must also be made aware that in the event of a long marriage – currently viewed as being around 6 years or more – the pre-nuptial agreement may not offer so much protection, and they may have to consider what the division of assets may be in a divorce.

This is the challenging part of the pre-nuptial agreement process in terms of managing the client’s expectations. A client who is the wealthier partner has come into the office looking to have their assets protected and is being told that whatever they sign, they will have to give away at least enough to make sure that their partner’s housing needs are met. The popular perception of the pre-nuptial agreement is often that a client can make sure that they will be able to give a minor pay-off to a spouse, and now you are telling them that they may have to pay large sums or provide housing for their ex-spouse if they do divorce. A lawyer’s job is to help the client find an agreement that matches their expectation of protecting themselves, but is still fair. Part of the role in this instance means helping the client to think about the terms of a future divorce but without the attendant defensiveness and self-protection that may come in. Clients are usually sure that they will never divorce and sure that if they do it will be amicable, or at least maturely conducted, but also sure that if they do divorce they will not hand over more than they are required to. A good lawyer will help a client to see that striking a fair and reasonable balance now will save them time, effort, and money in the future.

One area where the pre-nuptial agreement can be particularly useful is in setting out how a richer party to a couple will provide for the care of the children in a divorce. There is often acrimony, or at very least tension, between the parties when a marriage breaks down. Telling a divorce client that they have to provide housing for their ex for at least as long as the children need it is often not easy for them to take. However, in a pre-nuptial it is a lot easier for the client to deal with the idea of providing a home for any potential children as it feels less like losing a point to a divorcing ex and more like making sensible plans for the future. Clients also are much more receptive to the idea of fairness in a pre-nuptial agreement, where in a divorce it may not seem fair to be providing for a spouse given that he or she has been unfaithful perhaps, or unreasonable in some other way.

Of course, in typical family lawyer fashion I have only talked about the emotional difficulties and the issues of fairness, and have completely left out any talk about the effectiveness of pre-nuptial agreements in bankruptcy – quite useful – or on death of one spouse or, increasingly relevantly, the large costs of elderly care of a spouse. There are of course broader applications beyond divorces, including inheritance planning which I will have to do another blog post on.