Pre-nuptial agreements: how enforceable are they?
How enforceable are pre-nuptial agreements in a divorce? Head of Family Law, Mark Reeves, takes a closer look at the issue in light of an important recent case…
In a case decided earlier this year a couple had been married eight years and there were three children aged 8, 6, and 2.
The wife’s family were wealthy. There was a pre-nuptial agreement and two subsequent post-nuptial agreements between the parties. The parties made these during the marriage at times when the wife’s parents made large monetary gifts to the wife.
It was accepted that if the pre-marital agreement had not been entered into then the marriage would not have taken place. And if the later agreements had not been signed by the husband then the wife would not have received the extra monies from her parents.
It was also accepted that the husband had intended to be bound by the agreements when he signed them. And both parties had been advised by experienced family lawyers throughout.
The wife’s parents were providing her with £100,000.00 per annum. They also had bought the property in which the couple lived, which was worth £6.7 million and had been gifted to the wife.
The husband had debts of £226,000.00 which were increasing. The wife’s father gave evidence that if the wife had to sell the house then he would stop all financial support. The husband had been made redundant two years before and only had ad hoc work paying £6.50 per hour.
The Court decided to order a sale of the London property and the wife to provide £900,000.00 to buy a property in which the husband could live – he paying to her only a peppercorn rent.
That property, in her name, was to be sold when the youngest child attained the age of 22. 45% of the net proceeds of sale were to be returned to the wife. The rest was to be used by the wife to buy a smaller property but in which the husband could live for the rest of his life.
The wife was also to pay the husband £292,000.00. This would discharge his debt and allow him to buy furniture and a car.
The overriding decision by the Court in this case reconfirms that it is the Court and not the parties who are going to decide financial resolutions if there is a divorce.
The Court will pay a great deal of regard to what is contained within any pre-marital agreement or subsequent agreement that has been signed by the parties. But they will have to consider what is fair and particularly the effect that any such agreement may have upon the children.
No nuptial agreement can be allowed to prejudice the reasonable requirements of any children. And clearly if the husband had been left with nothing, as would have occurred in this case if one had regard only to the agreements that were signed, then it was going to be that much more difficult for the children to have any meaningful relationship with their father.
The Court also made the point that the longer the marriage had lasted the more likely it was that events would have occurred. This might have seemed fair at the time of making the agreement, but with the passage of time had become unfair.
The Court observed that it was unlikely to be fair that one party is left in a predicament of real need where the other has more than enough assets for their purposes.
In making its decision, the Court took into account that the wife’s father may well stop supporting her but she continued to receive £30,000.00 per annum from her mother. The Court’s view was that the husband in due course might be able to earn a similar sum and hopefully would earn more when he had finished the course that he was on from 2017.
It was observed that great weight had to be given to the agreements. Particularly given the maturity of the parties and the expert legal advice they had received. Although it was observed that the agreements made no provision at all for the husband in any circumstances. He was a person of real need with no property, no income, no capital, considerable debts and no borrowing capacity.
Previous cases have decided that it is in the children’s interests that each parent should have an appropriate home in which they can visit and stay. The decision made by the Court allowed the children in the future to stay with their father, but left the value of the asset in the hands of the mother.
This is an important decision by the Court. It shows how strongly the Court will try to adhere to agreements that have been entered into but will, in spite of the terms of that agreement, have regard to the realities of the situation if there is to be a divorce.
This clever judgment left the wife with almost all the matrimonial assets, but ensured also that the husband was not going to be made bankrupt. And importantly, it ensured the children would be able to have an appropriate and active relationship with both of their parents as they grew up.
The central message is that pre-nuptial and post-nuptial agreements are of great significance and will be given great weight by the Court. But not to the extent usually that it leaves one party with everything and the other with nothing.
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