Article
Nuptial agreements – where are we now?
15 July 2024 | Applicable law: England and Wales | 3 minute read
We are now 14 years post-the seminal case of Radmacher v Granatino, in which the House of Lords (as it then was) held that judges in England and Wales should give effect to nuptial agreements, provided certain conditions are met. The number 14 is often associated with resourcefulness and independence, which is perhaps fitting, as the last 14 years have shown that couples can do much better than leaving the financial fallout of their separation to chance. A properly drafted, fair nuptial agreement allows couples to be the authors of their own lives, providing certainty in place of discretion.
In Rachmacher, the Court held that judges should give effect to pre- or post-nuptial agreements that are entered into freely by each party with a full appreciation of their implications, unless it would be unfair to do so. It was a ground-breaking decision, bringing England and Wales closer to the practice in other jurisdictions, including the US and much of continental Europe.
In the intervening 14 years, nuptial agreements have been become really rather mainstream as a means of wealth protection, and judges have been increasingly encouraged to make their judgments publicly available. So, what was once a trickle of cases involving agreements made post-Rachmacher is now a veritable flood.
In the last 18 months alone, we have had judgments in which:
- Disputed agreements were found to carry full weight, as a result of which a husband's capital award from a wife worth c.£250m was limited to a loan of just £6.5m, to be repaid when their child reached the age of 18 (MV v MW [2023] EWFC 79);
- The nuptial agreement, entered into without the husband taking legal advice (albeit he had had the opportunity to do so) had a significant impact on the husband's claim (against realisable assets in the wife's name in excess of £43m) and he was limited to his reasonable needs and a costs order was made against him (HD v WB [2023] EWFC 2);
- The wife's argument that she had been put under undue pressure failed; some pressure was inevitable, and the existence of top-quality legal advice was in any event a very strong countervailing factor. The deal was reasonable and the wife should be made to adhere to it. (MN v AN [2023] EWHC 613 (Fam)); and
- An agreement entered into without financial disclosure or independent legal advice was upheld, albeit with an adjustment to meet the financially weaker party's needs (Xanthopolous v Rakshina [2023] EWFC 50).
- An agreement signed 3 weeks before carried significant weight and the fact that the wife had given her main asset to the children of her first marriage was a material factor - to ignore it in the face of the prenuptial agreement would lead to unfairness. The wife's needs, including re-housing, still had to be met but the self-directed loss of her home meant that she had to expect that her needs would be at a lower level (BL v OR [2023] EWFC 229).
- A wife was not held to a post-nuptial agreement due to material non-disclosure by the husband in his failure not to update the value of his assets which knew to be out of date prior to the signing of the agreement (TRNS v TRNK [2023] EWFC 133).
- A wife signed a prenuptial agreement with full knowledge and legal advice and was aware that her claims on divorce would be heavily restricted, but contrary to its terms, the couple failed to review the agreement following the birth of their children. The agreement was not fully upheld and the wife was provided with an additional amount for housing (albeit but without the agreement, her entitlement would have almost doubled) (AH v BH [2024] EWFC 225).
These cases illustrate the robust approach that English judges will adopt when faced with nuptial agreements. Best practice will always include each person having independent legal advice and the exchange of financial disclosure, and the agreement must result in a fair outcome with reasonable needs met. Anyone entering into a pre- or post-nuptial agreement must expect to be held to its terms.
But it is worth bearing in mind that the cases listed above (where judges ruled on the validity and/or terms of a nuptial agreement), represent a tiny minority. In the vast majority of cases, the terms of the agreement are implemented. Those are the cases, which by their very nature, are dealt with outside of the spotlight - privately, swiftly and cost-effectively – which is why nuptial agreements remain the best means of protecting assets and providing clarity in an otherwise discretionary (read: highly uncertain) jurisdiction.
Or, as one judge recently put it rather more eloquently:
'These agreements are intended to give certainty. Those signing them need to know that the law in this country will provide that certainty. Litigants cannot expect to be released from the terms that they signed up to just because they don't now like what they agreed.'
*References in this article to nuptial agreements includes pre- and post-civil partnership agreements.