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Technical briefing - 11 June 2012

To have and to hold - the legal status of nuptial agreements

Guest author: Kate Francis

Senior Associate, Pinsent Masons

Pre-nuptial, post-nuptial and separation agreements can save the often vast expense, and undoubted stress, of drawn out legal battles when a relationship ends. However, particularly for multi-jurisdictional families, without careful consideration, nuptial agreements can themselves give rise to lengthy and expensive disputes.

Traditionally, pre and post-nuptial agreements have been the preserve of wealthy families, frequently entered into to protect inherited family assets. British couples have generally lagged behind those in Europe and further afield, where nuptial agreements are more common. They are not without their difficulties however – for example, if they are improperly executed or if an attempt to vary the agreement goes awry. An imperfect nuptial agreement can add another costly layer of complexity to divorce proceedings.

On matters of divorce, the English courts are considered by some to be more sympathetic to the poorer spouse. This has led to a number of spouses casting around for a sufficient connection to this country to allow the English courts to hear his or her case, particularly in cases where the financial stakes are high. For those families that live internationally, perhaps travelling between a number of countries for work, if one of those
countries is England, the chances of the English courts being able to hear the case are increased.

As a result, the English courts have heard a wealth of cases where couples assert contrary claims to the assets of the family. In most of these, the assets or the family or both, originate from a different country.

For wealthy or international families, this has frequently involved considering the issue of nuptial agreements.

Binding or not?

Despite what some reports would have you believe, no nuptial agreement is automatically binding upon the couple. That said, following the well reported case of Radmacher, the English courts are increasingly inclined to uphold a pre or post-nuptial agreement wherever possible.

After Radmacher, the enforceability of a pre-nup was again raised before the English courts in a case involving a French couple and a ‘separation de biens’ entered into after four years of marriage. The decision in that case reinforced the warning that while pre or post-nups can cut through what might be years of expensive legal dispute, they are not always the easy solution they might at first appear to be. Agreements entered into in other countries and considered by English courts can be particularly problematic.

Maintenance issues

European marital property regimes, and therefore European marital property agreements, do not usually cover issues such as spousal or child maintenance in the event of divorce. The English court
will demand that these are dealt with. Consequently, even if the agreement covers the division of the family’s assets and is itself upheld, there could well be further significant on-going or lump sum payments in respect of maintenance for the spouse and/or any children. Arguing over what those payments should be can be an expensive and time consuming exercise.

People who might intend to bring divorce proceedings in England, or could potentially be on the end of divorce proceedings here, therefore have much to consider. Aside from the usual checks of any nuptial agreement they might intend to rely on, they should ensure that it is sufficiently clear on the kinds of issues raised here.

This article is published with permission from Pinsent Masons and first appeared in its PrivateWealth bulletin in Spring 2012. Correct as of May 2017.

 

 

 

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