This article will consider and explore the law relating to nuptial agreements, advantages of having one and how the Courts are approaching them.
What is a nuptial agreement?
A nuptial agreement is a form of agreement entered into between couples anticipating marrying (pre-nuptial) or who have already married (post-nuptial).
It sets out what should happen to the family finances if the marriage breaks down. For example, it may include a clause ringfencing either party’s assets accrued prior to the relationship.
It will often include clauses about what property is to be kept separate and what property will be considered as joint.
It may also include provision on jurisdiction and consider what should happen in the event of the untimely death of one party.
What is the law?
Nuptial agreements are not technically legal binding in England & Wales.
However, over the last 13-years, the Higher Courts in England & Wales have increasingly recognised that such agreements should be given weight. In some cases, they have can have decisive and very compelling weight, meaning that parties will be held to the terms of the same.
In the Supreme Court decision of Radmacher the Court upheld the provisions of a nuptial agreement and took the time to set out in what circumstances nuptial agreement should be given weight as follows: –
- Parties must enter the agreement voluntarily, without pressure and be informed of its implications.
- Whether foreign elements should enhance the weight of the agreement.
- Whether the circumstances at the time the Court considers the matter make it fair or just to depart from the agreement. In other words, if the agreement is fair the Court should not look behind the agreement.
A nuptial agreement cannot prejudice the reasonable needs of a child of the family. However, in the right case, a nuptial agreement will be given compelling or decisive weight, as aforementioned.
Additionally, the Court usually like to ensure each parties’ needs are met in the event of divorce. However, as we see below, this is not always the case now or if they are considered it is for a defined period.
In 2014, the Law Commission set out what it considered should be the main ingredients of a qualifying nuptial agreement as follows: –
- That it must be a valid contract;
- Must be freely entered;
- Must contain a statement that both parties understand it is a qualifying agreement and it will remove the Courts discretion to make financial provision;
- Should be made at least 28-days before the marriage;
- Both parties should receive, at the time of making the agreement, disclosure of the other party’s resources;
- Both parties should have sought independent legal advice
Note; the above is not statutory guidance e.g. parties don’t have to follow this. It is only recommendations from the Law Commission. Therefore, the absence of any of the above may not make a difference as to the weight to be applied but equally could be critical if they are not followed.
Jurisdiction / oversees assets
It is of utmost importance for you to consider seeking the advice of international lawyers in the Countries you have assets to ensure you are fully abreast of all advantages and disadvantages of entering a Nuptial agreement.
It may also be beneficial to include a jurisdictional clause within the agreement e.g. you may have significant property oversees and the law in that country treats Nuptial agreements as legally binding – unlike England & Wales. Again, specific international law advice will be required in these types of cases.
How the Court are approaching Nuptial agreements
There has been a major shift in the Court’s approach to Nuptial agreements following Radmacher. More and more cases now indicate that the Courts are giving significant weight to such agreements unless there are compelling reasons not to.
Even in case where parties argue that their needs are not met by the agreement, the Court are upholding Nuptial agreements. For example, in the 2023 case of MN v AN, the husband had assets of £32.5m and the wife £62,000 – prior to the marriage. The wife tried to argue that the agreement did not meet her needs and was vitiated by pressure. The Court found there was no vitiating factor and no other factor which meant it should be given less weight. In this case, both parties had instructed top divorce lawyers. The Judge in this case said ‘these agreements are intended to give certainty. Those signing them need to know that the law in this country will provide that certainty. Litigants cannot expect to be released from the terms that they signed up to just because they don’t now like what they agreed.’ The Nuptial agreement was considered fair with the wife receiving £11.75m.
In the 2014 case of Luckwell v Limata, although the Court made an award based on needs in awarding the husband a home, it was only a reversionary interest. This meant that the property reverted to the wife in the event of a certain event arising.
In the 2022 case of CMX v EJX, the Court found that the marriage contract had been freely entered into by each party. In this case the Court even held that the lack of independent legal advice or full disclosure was not fatal, the Radmacher test for upholding the marriage contract was satisfied. The Court went on to consider the Wife’s needs based on the facts it was a long marriage and she had contributed fully.
Advantages of Nuptial agreements
A Nuptial agreement entered freely with a full appreciation of the implications, legal advice, disclosure etc is very likely to be given significant weigh by the Court and upheld in the event there are any disagreements.
Other advantages include:
- Protecting inherited wealth, gifts, family businesses, property owned before the marriage;
- Minimises issues on divorce;
- It saves money. It is cheaper to enter a Nuptial agreement than dispute matters in Court;
- Parties can freely agree their own terms. If disputed at Court, financial arrangements can be very unpredictable;
One significant advantage is that the Court are unlikely to apply the s25 checklist (consideration beyond the scope of this article) in the event the parties are held to the Nuptial agreement. When applying the s25 checklist the Court must consider several matters before making Orders such as transfer of property, pension sharing, spousal maintenance etc. The Courts have a wide discretion. In absence of a Nuptial agreement, this is often where the Court can award a significant share of the available resources to the economically weaker party, irrespective as to where they came from, e.g. this could mean one party is awarded some of the inherited wealth of the other party if the assets generated during the marriage are not sufficient to meet their needs.
A Nuptial agreement can therefore significantly curtail the Courts discretionary powers and ensure any award regarding needs is limited to those which are absolutely essential.
In short, a Nuptial agreement is still not a legally binding agreement in England & Wales. However (emphasis added), the Court’s are now very likely to uphold the agreement if disputes arise, especially if there are no vitiating elements. The Court may go behind the agreement if a parties’ needs have been totally disregarded but as we have seen in recent case law, this may mean the property reverts backs to the other party.
This article should not be relied upon as legal advice. You are strongly encouraged to seek independent legal advice if you are considering a Nuptial agreement. This article does not consider every single aspect of the Nuptial agreements as there are other factors which may render a Nuptial agreement unenforceable / unreliable. Each case is fact specific and specific legal advice is needed to ensure you appreciate all aspects.
This article was written by Colin Hornby, a Family Parter at MLP Law specialising in divorce and associated financial matters.
If you would like to speak with Colin about Nuptial agreements, please email him ColinH@mlplaw.co.uk or call his direct dial 0161 926 1581.