What are Pre and Postnuptial Agreements?

For the sake of ease, I will refer to the document as a prenuptial agreement (PNA) hereafter.

In no circumstances can a PNA be binding in our jurisdiction (England and Wales).

In every case, the court is obliged to consider the factors set out in section 25 of the Matrimonial Causes Act 1973 and thereafter to exercise its discretion. The existence of any PNA will be one factor to which the court has regard when conducting that exercise.

Although the court has an obligation to consider the section 25 factors in every case, the PNA is one factor of the case, but it can be a magnetic factor in the right circumstances and accordingly can play a leading role in the court’s analysis.

In short, it is right that the court must consider the section 25 factors but in a given case that analysis may be dominated by the terms of the PNA.

How does the court establish the weight to be attributed to a PNA?

In the case of Radmacher Lord Phillips identified three areas for consideration when determining the weight to be attributed to a PNA:

1. factors detracting from the weight
2. factors enhancing the weight
3. fairness

Fairness

It is evident from the case law that the following matters are taken into consideration when considering fairness:

• Any minor children remain the courts first consideration.
• The origin of the protected asset is relevant i.e. is it on a traditional analysis non-matrimonial and the longer that has elapsed since the agreement the more likely it is to be unfair.
• Leaving a party in a predicament of real need is unlikely to be fair.
• Respect should be afforded to the parties’ autonomy.
• An unfair PNA need not be discarded instead the court may alleviate the unfairness.
• A partial departure from the PNA by the financially stronger party does not render the document void as not every sharing case is necessarily an equal sharing case.

How does the court assess needs in the context of a valid PNA?

Self-evidently an important component of any analysis of fairness is whether the parties’ needs are met. How are those needs assessed? Is that analysis of any needs any different from that ordinarily undertaken by the court in a case without a PNA?

The courts analysis of needs in the context of a PNA will be informed by the following: –

• a PNA can alter what would otherwise be fair which includes how generously parties’ needs should be assessed
• a PNA may feature prominently as a depressing influence on that analysis
• the floor of that analysis may be the minimum to keep a spouse from destitution specifically to a level inconceivable had there been no PNA
• that floor is not necessarily the floor to be applied in every case – that will depend on the circumstances of each case and
• alternatively, and contrary to the preceding cases, Mostyn J has said in a recent court decision that he does not consider the analysis need be any different than in any ordinary case

The future

PNAs will be considered by the court based on the state of the law at the time of relationship breakdown and not the time the agreement is entered into.  Accordingly, legal advice is therefore inherently general and cannot be specific as to the future interpretation and implementation by the court.

PNAs have been the subject of a Law commission report on Matrimonial Property Needs and Agreements and the Law commission set out a draft Nuptial Agreements Bill but as, yet it has not been taken up by the government.

Why enter into such agreements?

Those seeking to enter into prenuptial agreements often do so for a variety of reasons of which one or more of the following may feature.

To protect family wealth

This is undoubtedly a very common reason for entering into such agreements and has been specifically approved by the courts as a perfectly reasonable aim.

To keep one’s own assets

This is often the aim of those who have been married before and who wish to protect their assets for the children of the first marriage.  Here whilst it is usually easy to isolate the property it is wished to protect the more difficult task is to frame the agreement so as to meet the needs of the surviving spouse particularly as they are likely to be older and not economically active.  Accommodation is often an issue here and can sometimes be resolved by giving a life interest to the surviving spouse in a Will.

Certainty

This is a very common reason for wishing to enter into a prenuptial agreement.  However, people should be warned that the law in England and Wales is a movable feast and certainty is hard if not impossible to obtain.

Points will be considered:

• The effect of duress, fraud or undue influence
• The relevance of financial disclosure
• The impact of foreign law
• The relevance of independent legal advice
• The relevance of fairness and meeting reasonable needs
• Dispute resolution (mediation or arbitration)
• Regular review

In conclusion PNAs are relevant and useful in some circumstances. It is essential that points 1 to 7 above are considered. The agreement should be in the form of a Deed with both parties stating and understanding that they are seeking to contract out of the court’s jurisdiction.