Exploring the Evolution and Importance of Prenuptial Agreements

What is a Prenuptial Agreement?

A Prenuptial Agreement is an agreement made by a couple prior to their marriage concerning the ownership of their respective assets during the marriage and in the event that the marriage should fail.  

Traditionally, Prenuptial Agreements have not been popular in England and Wales with many couples considering them to be unromantic and rather “grubby”. This is in contrast to many European jurisdictions where they are considered to be the norm. However, according to a 2021 report from the pressure group, the Marriage Foundation, one in five couples married since 2000 had some kind of Prenup.

Prenuptial Agreements used to be considered the domain of the ultra-rich only. Whilst they will always be more popular with couples where at least one party has significant assets, they are now becoming more mainstream. This is due to a number of societal and cultural changes. 

Why are Prenuptial Agreements becoming more popular? 

People are generally marrying later in life and may have already acquired significant wealth before they marry. One party may already have a property which they bring to the marriage. With high property prices and rising interest rates, it is now very common for parents of one or both parties to contribute to the acquisition of the family home. The couple may wish to preserve their pre-marital assets and contributions from their respective families in the event of marriage breakdown.  

Second and third marriages are more common, as are blended families. A Prenuptial Agreement can protect assets for the benefit of the biological children of the owner.  

Pets are also more popular these days and, whilst a court views a pet as any other item of property, a Prenuptial Agreement can set out arrangements for the parties to spend time with a pet.

What is the status of Prenuptial Agreements?

Whilst Prenuptial Agreements have always been legal in English Law, the extent to which they have been legally binding and upheld by the family court has varied and the case law has gone backwards and forwards over several decades. This was until the landmark 2010 case of Radmacher -v- Granatino. In that case the Supreme Court ruled that effect should normally be given to a Prenuptial Agreement freely entered into by each party with a full appreciation of its implications unless, in all of the circumstances, it would not be fair to hold the parties to the agreement.   

Therefore, whilst the court is still not bound to follow the terms of a Prenuptial Agreement upon divorce, the court will normally afford decisive weight to the agreement unless it can be demonstrated that it is unfair. Whether or not an agreement is fair will depend upon the particular circumstances of each couple.

Future of Prenuptial Agreements

In 2014 the Law Commission published a report which recommended that legislation should be introduced to enable “qualifying nuptial agreements” to be legally binding and enforceable in courts in England and Wales. Provided Prenuptial Agreements complied with various requirements they would be upheld as enforceable contracts. It would no longer be necessary to satisfy the court’s discretionary assessment of fairness.  

We are now 10 years on from that report, but the government has yet to issue its final response to the proposal. Further, work has now begun on a new Law Commission project assessing the options for reform of the law governing finance on divorce/dissolution of civil partnership more generally and the government has indicated that there will be no legislation on Prenuptial Agreements pending the completion of that report.  

Recent case on Prenuptial Agreements

The 2023 case of MN -v- AN reinforces the fact that Prenuptial Agreements will be upheld by the court if certain conditions are met.  

In that case the parties entered into a Prenuptial Agreement in June 2005 and married in September of that year. The husband was aged 61 and had assets amounting to £32.5m; the wife was aged 51 and had assets totalling £62,000. Both had received legal advice and had negotiated the terms of the Prenuptial Agreement via their lawyers.

The marriage broke down in 2019 and the wife challenged the Prenuptial Agreement on the basis that the provisions did not meet her needs and it was therefore unfair. She also argued that the husband had exerted undue pressure on her regarding signing the agreement.

The court considered the circumstances of the execution of the agreement but did not find any undermining factors. The court took the view that the agreement provided for the wife’s income needs and upheld the agreement.

Procedural requirements for Prenuptial Agreements

Some procedural requirements which should be followed when a Prenuptial Agreement is being prepared in order to give it the best possible chance of being upheld, if challenged on divorce, are:-

• It must be carefully drafted to achieve fairness between the parties and meet needs
• There must be adequate financial disclosure which is summarised in schedules annexed to the agreement
• There must be an opportunity for the parties to negotiate the terms
• Both parties should have independent legal advice
• The agreement must be executed in plenty of time before the date scheduled for the wedding – at least four weeks is recommended

Conclusion

It looks as though Prenuptial Agreements are here to stay and that the government will eventually give statutory backing to them in certain circumstances.

Given recent societal and cultural changes it is likely that a growing number of couples will find them to be a useful tool for protection of family and pre-acquired wealth and clarity and security within their relationship.

If a couple is considering entering into a Prenuptial Agreement, early advice from a family law specialist is essential. Contact our Family law team if you require further information.