As a young Family Law practitioner, it is plain to see a stark contrast in generations whilst we move towards a transparent approach to discussing relationship finances.
This is a positive development, particularly given that future clients are likely to be more aware when entering into cohabiting relationships or marriage. This also reflects a more level playing field in terms of gender and breadwinning or homemaking responsibilities. These are conversations that are now prompted early on without many assuming traditional roles.
However, not all protective measures are as ‘black and white’ as TV dramas and it can be difficult for clients to consider instructing a legal practitioner for protection that isn’t guaranteed. It is always worth taking the time to consider the benefits of seeking early advice, and understanding how to maximise financial certainty in the event of divorce.
Firstly, a prenuptial agreement is designed as a contract entered into before marriage. The document will set out how you and your future spouse would wish for your assets to be divided, if separation occurred. A prenuptial agreement is extensive, with precedents designed to cover property, savings, any business interests, liabilities, inheritances, gifts or children. The agreement can cover existing assets and anticipated future assets also.
These agreements are not automatically binding upon both you and your future spouse, even if you have both signed the terms. This may be different from the anecdotes on TV – England and Wales are a separate jurisdiction with guidance to say that agreements are discretionary for the Court to approve. The Court will determine each outcome based on ‘fairness’, however this does not mean that prenuptial agreements are not persuasive or that the Court would entirely discard the settlement idea.
In 2010, the case of Radmacher v Granatino clarified that prenups can be persuasive and more importantly, determinative, if satisfying the criteria set by the Court. The criteria intrinsically relates to this focus on fairness, with each aspect providing more of a guarantee to a Judge that there was a transparent and consensual agreement reached.
Essentially, post-2010, prenups are more likely to be taken and adopted by the Court into a formal Order provided they broadly align with the ‘goalposts’ of fairness. It is notable that sometimes these ‘goalposts’ can be fairly wide and the Court can have significant discretion as to what this represents. This is advantageous in circumstances where your agreement could demonstrate a wide variety of outcomes – the Court are unlikely to pigeonhole a case as to ‘exact figures’ on fairness.
The first consideration when instructing a practitioner should be whether you and your spouse are willing to be led by the guidance. In the event that these steps are not followed, then you are likely to be advised that an agreement is not worth the paper it’s prepared on. You will need to consider if your agreement has been entered into freely, whether there is any pressure or duress, if you are both willing to engage in full financial disclosure, and if you are both open to discussions that align with your desired outcome but also overall fairness. If these factors are met, then the agreement (as determined by recent case law) is more likely than not to be followed.
Aside from steps you can take to maximise the chances of your agreement being upheld, there are also general and personal benefits to getting this put in place.
An agreement means that you have both achieved some certainty and been able to have a proper discussion about your finances, therefore managing your own expectations early on. It is surprising how much these discussions could shape your decision-making throughout the marriage, insofar as responsibilities for any children, your chosen residence, or career progression.
You can also feel more confident about ring-fencing assets, particularly where they have been gifted to you or there are family or friends whom you know may provide inheritance. A practitioner can also provide advice on future steps - to maintain the intention that you seek for funds to be kept separate.
In summary, prenuptial agreements are not legally binding by default. There may be reform in the future, but currently there is no backstop provision to guarantee the Court will endorse your own terms. However, when properly prepared, and with an experienced Family Law practitioner assisting you, there is no reason to assume that your agreement will be discounted.
