Page 1

HOOPER & WOLLEN Pre-Nuptial Agreement – sound a bit Hollywood? Pre-nuptial agreements are commonplace in many countries outside the UK, including our close neighbours Germany and France, and of course the USA orty per cent of marriages end in divorce and if a previous divorce has taken place it’s understandable that more people want to clarify their future financial positions to protect themselves and their children. The concept of a pre-nup agreement isn’t romantic and the time and emotional strain of drawing one up cannot be ignored, however it can protect the couple from the additional argument about property and money should the relationship break down. Wealthy families concerned to preserve assets in the event of a divorce are most likely to embrace a pre-nuptial agreement. Mature people marrying or entering a civil partnership are likely to have accumulated assets through their working lifetime and wish to preserve their property and financial status for the benefit of their children or grand-children, as well as protect their own financial security into older age. Where a marriage or civil partnership has already taken place, a post-nuptial agreement might be considered. Whilst pre-nuptial agreements are regularly enforced by foreign courts, the Courts of England and Wales might take the agreement into account only as being one of the factors for consideration under Section 25 of the Matrimonial Causes Act 1973. The recent high profile case of Radmacher v Granatino involves a German heiress and her French husband, who had both lived in England during their marriage. Both were from wealthy families, although the wife’s family held a larger fortune, amassed through the paper industry. In 1998, the couple had

F

entered into a pre-nuptial agreement in Germany, where such contracts are standard practice. The husband, at the time a successful investment banker, agreed within the contract that in the event of a marriage breakdown, he would get nothing through divorce. The marriage did break down and the

husband pursued a claim for financial relief in divorce in the English courts. The Judge at first instance gave consideration to the pre-nuptial agreement as one of the relevant factors and acknowledged it was valid under French and German law, but considered it defective under English law because the husband had not had independent legal advice before signing the agreement and there had been no financial disclosure by the wife. The Judge did not allow for the full effect of the prenuptial agreement but gave some regard to it by not giving the husband as much financial settlement as she might otherwise have done. The wife appealed. In 2009 the Court of Appeal decided that the German pre-

nuptial was not defective because the husband was an able and intelligent man, who had had every opportunity to obtain legal advice and negotiate the agreement but had chosen not to do so. Further, although the wife had not given financial disclosure, the husband knew very well that she came from a very rich family. The Court of Appeal found that in the circumstances, reliance should have been given to the pre-nuptial contract and it indicated that in future, due consideration and reliance should be given to a contract where the parties have freely and knowingly entered into it. The settlement granted to the husband at first instance was reduced by the Court of Appeal. The husband’s appeal was heard by the Supreme Court in March of this year and it could be some months before judgement is handed down. This is an extraordinary case and doesn’t reflect most people’s situations but like all precedents, it sets a guideline to follow. Importantly it has laid down the gauntlet for Parliament to take account that where there is risk and uncertainty in matrimonial law, weight ought to be given to pre-nuptial contracts where couples make efforts to minimise the costs, emotional turmoil and financial uncertainty that might otherwise befall them if their relationship breaks down. ELIZABETH FOSTER Readers should consult professional advisers before acting upon the issues raised in this article. If you would like further advice regarding any of the issues raised please contact Elizabeth Foster at Hooper & Wollen Solicitors in Paignton 01803 521692 or e-mail elizabeth.foster@hooperwollen.co.uk.

HOOPER & WOLLEN Solicitors Carlton House, 30 The Terrace, Torquay, TQ1 1BS Telephone 01803 213251 10 The Quay, Dartmouth, TQ6 9PT Tel 01803 832191 Belgrave House, 2 Winner Street, Paignton, TQ3 3BJ Tel 01803 521692 www.hooperwollen.co.uk

/june_2010  

http://www.hooperwollen.co.uk/downloads/pdf/29/june_2010.pdf