An introduction to nuptial agreements

If you’re considering a nuptial agreement, this article gives you an introduction to the factors you might like to consider, as well as some practical pointers to protect you and your spouse.

The types of nuptial agreement

A pre-nuptial agreement is an agreement before the marriage. A post-nuptial agreement is an agreement after the marriage. There are two main types of nuptial agreement.

There are nuptial agreements that seek to separate non-matrimonial property. Non-matrimonial property is generally property held by a spouse prior to marriage, or received by them during the marriage from a source wholly external to the marriage and/or otherwise than by their endeavours (for instance by gift or inheritance).

Alternatively, there are nuptial agreements that seek to separate non-matrimonial property and also exclude the sharing principle. Sharing is a fundamental principle of English divorce law. If you do not want to share, you need a pre- or post-nuptial agreement.

Some do’s in nuptial agreements

• Do raise the issue of entering a pre-nuptial agreement as early as possible. In more complex cases, at least six months before the wedding if possible
• Do sign off the pre-nuptial agreement in a timely manner before the wedding, ideally no fewer than 28 days before the wedding
• Do obtain support from family and friends
• Do consider the use of a coach or mediator to assist discussions
• Do seek advice from a specialist solicitor early on. While the court may still  uphold an agreement where there has been no independent legal advice, but is satisfied that the parties have understood the implications of the agreementbest practice dictates one should err on the side of caution and obtain full independent legal advice
• Do ensure that each party gives full current financial disclosure. Typically, this is in the form of an asset summary annexed to the agreement on which the other party can raise queries if they see fit. The point being that the less wealthy party needs to have all the material information available to them so that they can make an informed decision as to the extent of the claims they are giving up in the event of the breakdown of the marriage
• Do ensure that any children or potential children are provided for in the agreement
• Do ensure that the financially weaker party will be provided for upon divorce. Reasonable needs should always be provided for
• Do ensure that both parties are freely willing to enter into the agreement and that both intend to be bound by it
• Do ensure that the agreement is properly negotiated and consider incorporating a review of the terms in the event of a significant change in circumstances.

Some don’ts in nuptial agreements

• Don’t put undue pressure on the financially weaker party to enter into a pre-nuptial agreement
• Don’t try to leave assets out of the disclosure process. Duress, fraud and misrepresentation will negate the effect of the agreement
• Don’t enter into an agreement in the hope that some parts of it will be unenforceable if it come before the courts.

A word on fairness in nuptial agreements

This is effectively a two-stage test.

Stage one is fairness. Independent legal advice is not mandatory under the current regime. However, taking independent legal advice, and having time to think, makes it harder for a person to establish stage one unfairness at the end of the marriage. The converse is also true.

If the less wealthy party does not see a solicitor and have the agreement signed off by said solicitor, his/her refusal so to do may present a future challenge to stage 1 fairness.

The current requirement is that the agreement was  entered into by both parties of their own free will, without duress or undue pressure and with a full appreciation of the consequences of entering into it. Each of those are questions of fact, and a court considering the agreement may have to make findings (possibly many years after the agreement was signed).

To advise that both parties should have independent advice is to advocate best practise.  This  makes it harder for the less wealthy party to establish stage one unfairness. All that is required from the solicitor is a Certificate of Specialist advice, which will read something like this:

• I explained to X the meaning and importance of the terms of the agreement in such a way that I believe that s/he has understood them, and s/he confirmed to me that he does understand them;
• I explained to X that s/he does not have to enter into the agreement and that s/he must not do so if s/he is unsure as to its probable legal effect, its meaning or terms, or if s/he does not wish to be bound by it, or is under pressure to enter into it. X confirmed that s/he understands the probable legal effect and meaning of the Agreement, that s/he wishes to be bound by it, and that s/he is under no pressure to enter it.
• I advised X as to the effect of the agreement under the law of England and Wales, including its effect upon what would otherwise be his/her rights under the current law of England and Wales and about the advantages and disadvantages, at the time that the advice was provided, to X of making the agreement.

A minimum 28-day period between the date of the pre-nup and the wedding is also considered best practice. If the 28-day period is breached, it does not automatically undermine the agreement, but it does materially increase the possibility of a successful stage one challenge further down the line.

If the 28-day period is to be breached there are other options available for consideration, including an “Agreement to Agree”, followed by a post-nuptial agreement, or a Deed of Confirmation after the wedding and the pre-nup.

Stage two is unfairness. It builds on the nuptial agreement itself but seeks to address the unfairness. This stage is less controllable because we do not have a crystal ball to see what might happen to the parties in the years come. We can only do our best to provide for a fair outcome in the event of the end of the marriage based on the facts, as they are now and, so far as is possible, as we expect them to be.

Are nuptial agreements worth the paper they are written on?

The short answer is yes!

It is not possible to oust or limit the jurisdiction of the court to make orders for financial provision in the event of a divorce, or to make financial orders for the benefit of children. However, the courts will respect a couple’s wish for autonomy provided certain safeguards are in place and so long as the agreement is fair.