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31 August 2015

For richer for poorer

3 mins

Love or hate them, prenuptial agreements are on the rise, along with divorce rates – especially among older people – the so called ‘silver splitters’.

Pre-nups are nothing new; we are all familiar with celebrities diving headfirst into their contractual bunkers at the time of relationship apocolypse. However, it seems there has been a more general sociological shift too: in practice, we are seeing more people take advice, although often somewhat sheepishly, as if   embarrassed to admit the marriage may not work out. The truth is, since it is impossible to insulate against love and commitment, one should at least try and insulate against divorce. 

Nevertheless, pre-nups are still considered unromantic and businesslike, in spite of the suggestion that an agreement vindicates that you are marrying for love rather than for financial considerations. 

As lawyers we always try, in the interests of fairness, to negotiate some form of financial relief for the financially more vulnerable partner, in case the romantic leap of faith goes awry. The truth is that in almost every pre-nup, one of the parties will ‘win’ and retain their wealth (often pre-marital or inherited) and the other will ‘lose’ or relinquish certain financial remedies that might have been otherwise available to them in court.The key purpose of the pre-nup is to try and oust the jurisdiction of the court and to create certainty for the parties on breakdown of the marriage. It can also substantially reduce conflict and cost, while giving the parties autonomy and control.

While most people prefer predictable outcomes it should be noted that although the Law Commission recommended in 2014 that pre-nups should become legally enforceable in the UK, this has not actually been enshrined in statute yet. Instead the judiciary are taking matters into their own hands. We have seen   numerous recent cases where pre-nups are given compelling weight by the courts, providing they are properly constituted and meet certain critical safeguards. Most notably in the Supreme court case of Radmacher –v- Granatino, the pre-nup was recognised as enforceable and was upheld. The court concluded that it is “natural to infer that parties entering into an agreement will intend that effect be given to that”. 

Needless to say, lawyers play a vital part in ensuring that the pre-nup is properly negotiated so that it can withstand, not only the vagaries of time, but survive judicial scrutiny if tested: if a pre-nup is to serve as lifeboat in troubled waters, you best make sure it’s seaworthy from the very outset.

Therefore take time to consider the content carefully and seek proper legal advice. Most of all, try to concentrate on what is to be shared, not just excluded, since no one wants to feel cheated at the altar.

This article was first published on the Canary Wharf Magazine

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