Prenuptial agreements play a role in a significant number of divorces in England and Wales. Since the 2010 Supreme Court decision in Radmacher v Granatino the stature of this type of agreement has been greatly enhanced.
However, the groundbreaking Radmacher case doesn’t mean the terms of a prenup will always dictate how finances are divided on divorce. That’s to say there are circumstances in which courts will decide that applying the provisions of a prenup aren’t a valid way to reach a financial settlement. In interpreting prenups courts will consider the following:
- Has the agreement been entered into freely?
- Did both sides understand fully the financial implications?
- In the circumstances, is it fair to hold the parties to the agreement?
Did one party sign the prenup under duress?
It’s fundamental to any contractual arrangement that the parties agree freely to the terms. When one party feels cornered into accepting the terms of a prenup he or she may argue that it is invalid.
Duress might occur when, for example one party refuses to marry until the agreement is signed. Courts will often insist that a prenup – to be valid – should be executed well in advance of a marriage ceremony (a period of 21 days is usually deemed sufficient to remove any suggestion of duress).
Other factors that can undermine the validity of a prenup include misrepresentation, undue influence or mistake as to the terms of the agreement. In general where there is a question mark over a party’s free will or the information relied on before entering the agreement the validity of a prenup could feasibly be challenged.
Were the financial implications of the prenup fully understood?
Unless there is complete transparency about each parties’ assets a prenup will be open to challenge. It’s always advisable for both sides to obtain independent legal advice so that an understanding of the legal and financial implications of the agreement be firmly established.
Is it fair to follow the terms of the prenup?
A prenuptial agreement can never subvert existing legislation – judges must still consider all relevant circumstances of the case when deciding on a financial settlement (Matrimonial Causes Act, 1973). In looking at whether or not a prenup results in a settlement that is fair to the parties the courts will consider several factors, including:
- The income, earning capacity, propertyand other financial resources each party to the marriage has or is likely to have in the future
- The financial needs, obligations and responsibilitieswhich each of the parties to the marriage has or is likely to have in the foreseeable future
- The standard of livingenjoyed by the family before the breakdown of the marriage
- The conductof each of the parties if that conduct us such that it would, in the opinion of the Court, be unfair to disregard it
A prenup that prevented a spouse applying for financial relief through the courts and asking for the above factors to be applied would be invalid.
Case study S v H
All of these issues were considered in the case of S v H (2020). There a prenup was signed without any independent legal advice just five days ahead of the marriage. When the marriage ended, the husband – who was bankrupt – asked the courts to implement the terms of the agreement. The wife sought to activate the terms of the prenup as part of her financial relief claim. In the circumstances the judge ruled that the prenup was invalid because:
- There was no legal advice,
- The parties had not disclosed one another’s assets to each other
- The agreement didn’t meet the needs of the husband
As a result the court ordered the wife to pay £675,000 to the husband and provide accommodation for his lifetime. The husband also received 60% of the wife’s pension.
Ordinarily a judge will attach considerable weight to a prenuptial agreement provided the conditions we’ve described have been met. Independent legal advice and full disclosure of assets is always essential. In addition, as the case of S v H demonstrates, a prenup can’t stop a spouse in dire financial straits applying to the courts for financial relief, irrespective of the terms of the agreement.