To have and to told, for better or worse – The rise of pre-marital agreements

The think-tank, Civitas, recently concluded that marriage is more popular than ever but as couples decide upon the arrangements for their big day should they have also made sure they have signed their Pre-Nuptial Agreement?

The recent McCartney case generated a considerable amount of press coverage of divorce and discussion.  Many commentators speculated about the arbitrary and discretionary nature of how cases are determined and expressed surprise by the fact that they did not have a Pre-Nuptial Agreement.

Society has changed considerably over recent years with people leading more international lifestyles, thus there has been an introduction, and acceptance, of ideas and concepts from Europe and worldwide.  One of these is Pre-Nuptial Agreements and the ability to ‘regulate’ your finances, should the marriage break down.  The idea of a Pre-Nuptial Agreement is now not confined only to the super-rich.

It should be noted at the outset, that Pre-Nuptial Agreements are not yet legally binding in England and Wales but they are a factor which the Court will take into consideration upon a divorce.  The most recent case regarding Pre-Nuptial Agreements is the case of Crossley -v- Crossley 2008 which has shown a willingness of the Courts to look favourably upon properly constructed Pre-Nuptial Agreements.

The Husband and Wife in this case were both independently wealthy with the Husband having a fortune of £45m and the Wife a fortune of £18m.  They met in June 2005 and were engaged by the September.  Thereafter, very experienced matrimonial lawyers settled the terms of a Pre-Nuptial Contract before the wedding, which provided that “Neither party should apply to any Court in any jurisdiction for a new Order for financial provision of any kind based upon the marriage”.  They married on 5 January 2006 and by March 2007 they had separated with the Wife petitioning for divorce.

The Wife subsequently applied to the Court to deal with the finances arising out of the marriage.  The Husband issued his own Application asking why the Wife should not be held to the terms of the Pre-Nuptial Agreement.  The Judge took the view that the couple had to explain in their financial forms (Form Es) why the Pre-Nuptial was or was not a “knock out blow”.  The Wife had to show why she should not be held to the Agreement she had signed.  She appealed against the Judge’s approach but her appeal was rejected.

Crossley shows the Court’s willingness to look at Pre-Nuptial Agreements not just as a peripheral factor but one of significant importance.  Lord Justice Thorpe, one of the Judges involved in the case, called for new legislation to define the legal status of Pre-Nuptial Agreements and the Law Commission recently announced that this is an area which they are going to consider and report upon in 2010.

The number of people entering into Pre-Nuptial Agreements has increased considerably over recent years.  They are not confined to the super-rich but those with assets that have accrued pre-relationship, those with Trust assets, family wealth with business interests already established.