Pre-nuptial agreements & Radmacher
Today saw the UK Supreme Court rule in favour of a pre-nuptial agreement in the case of a German paper company heiress, Katrin Radmacher.
Her ex-husband had pursued the case after Appeal Court judges had cut his settlement from £5m to around £1m, as a result of the pre-nuptial agreement which was entered into back in 1998.
Pre-nuptial agreements have never been legally binding in England and Wales. It would be wrong to say that the Radmacher judgement results in them becoming legally binding.
What the judgement has said is that pre-nuptial agreements are influential in reaching a settlement, but the Court retains discretion. This discretion is determined by s.25 of the Matrimonial Clauses Act 1973.
It means that pre-nuptial agreements can be legally binding but they are not automatically so.
During a webinar on the subject this afternoon, hosted by Neil Denny from Mogers Solicitors, a number of factors were discussed that would be considered in determining how enforceable a pre-nuptial agreement would be when a marriage was dissolved.
These factors include a need for both parties to enter into the agreement with free will and to be informed of all of the implications of the agreement. Sound legal advice is desirable when the pre-nuptial agreement is being formed, to ensure this is the case.
The Court would also look at anything else that might be going on at the time the agreement is formed. This included whether there was any duress, fraud or misrepresentation. It might also include whether a party to the marriage was under pressure or if a dominant position was being exploited to get the pre-nup signed.
Fairness remains the overriding principle in all of this. Assuming the terms of a a pre-nuptial agreement are not unfair, it seems likely that the Court will try to enforce it.
Where the terms of a pre-nuptial agreement are unfair to any children of the marriage, it is less likely to succeed. As a result, Neil suggested that agreements are revised on the arrival or planned arrival of each child.
Here at Informed Choice, we occasionally speak to clients about the need for pre-nuptial agreements, particularly when older clients are entering into second (or third) marriages and have accumulated significant wealth they wish to protect for the benefit of their children or grandchildren.
You should always seek professional legal advice in these circumstances. We can recommend a number of excellent family lawyers who are able to assist with this type of planning.
Chartered Financial Planners, such as Informed Choice, can also play an important role in ensuring that you are fully disclosing all relevant and material information to your future spouse when the agreement is being drawn up.
Photo courtesy of bastique.