To Have and to Hold (On Trust)
Pre-nuptial agreements are given weight
There can be few areas of family law that generate so many column inches and yet are so niche as the preparations of pre-nuptial agreements. Since Radmacher v Granatino was finally decided in 2010 in Ms Radmacher’s favour, Pre-Nuptial agreements have often been in the news but are actually relatively rare. What has brought them back into the news of late is the final report as a result of a Law Commission enquiry, announced on 27th February 2014 and available here, that recommended a review of the law surrounding financial agreements in marriage.
It was a common misconception after the press coverage of Radmacher that from then on, parties could contract out their matrimonial rights to a financial settlement. In fact the pre-nuptial agreement was found by the Supreme Court to have “decisive weight”. It was recommended by the Court that this should be the applicable test for pre-nuptial agreements unless they were unfair on one or other party, but if anything this led to more confusion on the matter. What does “decisive weight” mean? How does it interact with the other most important criteria in dealing with financial relief, the needs of the parties? It is still unclear to what extent one party will be required to meet the needs of the other after their relationship is over.
This uncertainty is the source of extensive legal argument and equally extensive legal bills in the rarefied economic circles in which the headline cases such as Radmacher and more recent pre-nuptial cases have taken place. However, most matrimonial clients are not operating on this financial level, and all clients want their pre-nuptial agreement to lessen the amount of legal argument and court fees rather than being a source of dispute. Therefore the needs of the parties will become the most important consideration with “decisive weight” in any potential divorce, and family lawyers have to bear this in mind when drafting pre-nuptial agreements. In more down-to-earth instances, the assets of the parties will be limited to a matrimonial home and perhaps some mortgaged investment property. In such circumstances, any agreement will likely be of very limited weight in comparison to the needs of any children of the parties. Since at the time of the engagement – and therefore pre- nuptial agreement – this is often uncertain, meaning that clients are concerned from the beginning that once their first child is born, the agreement will be worthless. It is with this uncertainty in mind that engaged couples will approach a pre-nuptial agreement.
Although the Law Commission’s intention was to remove uncertainty, at the moment uncertainty is only increased. Couples enter into a pre-nuptial agreement not knowing what the legal landscape will be when the agreement comes into effect – if ever, and hopefully never. There is also the uncertainty of the position of the parties. Although they are about to commit to each other in marriage, they have to think about what would happen in a potential divorce. This means considering all the mistrust, acrimony, and financial challenges that a divorce might involve when considering a pre-nuptial agreement.
It is the role of the lawyer to try and manage this uncertainty. By striking the balance between fairness and protecting what can be protected, as well as guiding the parties through the process and helping them to understand what is and what isn’t possible to protect, family lawyers can make the process as painless as possible. By preparing an agreement which is clear, practically minded, and well-drafted family lawyers can try and ensure that it is effective for the longer term.
Trainee Solicitor at Garner & Hancock LLP
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