What is Pre-Marital Agreement?
A Pre-Marital Agreement is a legal document that is drawn up between two parties, prior to a marriage. It sets out how assets and income will be divided in the event of a marital breakdown. Pre- Marital Agreements must be drafted and executed prior to the marriage.
When is a Pre-Marital Agreement Appropriate?
A Pre-Marital Agreement is appropriate when there is a disparity between the parties’ assets and/or income, for example where one party is a high earner, where there is family wealth or where parties wish to protect assets for children from previous relationships or marriages.
Are Pre-Marital Agreements legally binding in England and Wales?
Pre-Marital agreements are not automatically legally binding in England and Wales, but they can be upheld by the Courts.
Pre-Marital Agreements are persuasive to the Court and in the case of Radmacher v Granatino [2010] UKSC 42, the Supreme Court said:
“The court should give effect to a marital agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”
In this case the Court upheld the Pre-Marital Agreement to protect the wife’s pre-marital wealth, but it was varied to meet the financial needs of the children.
In the more recent case of MN v AN [2023] EWHC 613 (Fam) Mr Justice Moor’s judgment reinforces the position that valid Pre-Marital Agreements will be upheld by the court of England & Wales.
How to ensure that a Pre-Marital Agreement will be upheld
The Court has clarified that both parties to a Pre-Marital Agreement should take independent legal advice. In Radmacher v Granatino [2010] UKSC 42, the Court clarified that
“In most cases it is necessary, and, in every case, it is desirable that the party against whose claim a pre-marital contract is raised should have received independent legal advice prior to entry into it. Why so? Because proof of receipt of independent legal advice is often the only, and always the simplest way of demonstrating that party entered into it knowingly….”
Further, any Pre-Marital Agreement must be in a form of a Deed, which means that the document must be in writing, the parties to the Deed must sign it before witnesses and it must be intended to be a Deed, be delivered and be dated.
Both parties to a Pre-Marital Agreement should provide full financial disclosure. This is generally interpreted as both parties’ having sufficient information to make an informed decision as to the other’s financial circumstances and to enter into a Pre-Marital Agreement with a full understanding of its implications.
The terms of the Pre-Marital Agreement should be substantially fair, for example the agreement should provide for each party’s basic needs to be met and those of the children of the family in the event of a divorce. If any assets are to be ring fenced from any division upon divorce, these should be clearly defined within the Pre-Marital Agreement.
If there are international assets, advice must be sought from the relevant country and any jurisdictional issues should be determined.
Neither party felt pressurised by the other party to enter into the agreement i.e., there should be no undue influence, duress or fraud, otherwise the agreement will be void. The Pre-Marital Agreement must be signed no later than 28 days before the wedding and ideally several months prior.
And finally, the Pre-Marital Agreement should be reviewed every 3-5 years or when a significant event occurs to ensure it remains fair and relevant for the parties and their circumstances.
What to include in a Pre-Marital Agreements?
It is important to establish what would happen to the parties’ assets and how they would be divided, this includes properties, inherited assets, pre-marital assets, trust interests, cash savings, business interests and investments, as well as personal belongings, pensions, debts, and spousal maintenance provisions.
When will a Pre-Marital Agreement or terms within it, be disregarded?
The Court will not uphold any clause within a Pre-Marital Agreement which is deemed to be unreasonable or unfair.
The Court will always have jurisdiction in the event of a divorce. If one party no longer wishes to adhere to the terms of the Pre-Marital Agreement, finances may still have to be determined by the Court.
Circumstances can change, and in the event of a dispute, the Court will look at your circumstances as they are at the time of divorce, not when the agreement was made. What may have been fair at the time of the agreement might not be considered fair if the parties’ circumstances have changed significantly.
Other Matters
Please note that a full list of the parties’ assets (on two separate pages) will be required including full address, full description and value of asset. It should be noted that an asset with the party’s name and another must still be included on this list.
Bank accounts will need to be included including balances. Whilst full account number need not be disclosed, enough digits of that account to identify that account if necessary.
If you would like to discuss a Pre Marital Agreement with a member of our team then please contact us on 01754 897150.