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How Legally Binding Are Pre-Nuptial Agreements?

on Monday, 29 April 2019.

You could be forgiven for thinking that if two adults make an agreement before getting married, about what would happen if they divorce in the future, they should be held to that agreement. But you would be wrong to do so.

The Court of Appeal has recently found in the case of Brack v Brack that three pre-nuptial agreements signed by Mr and Mrs Brack before their marriage were unfair. As a result, the case has been sent back to the High Court to reconsider what share of Mr Brack’s £11million wealth should be awarded to his wife.

What Did the Agreements Say?

Mr and Mrs Brack were a Swedish couple who had been married for 18 years and had two children. Mr Brack was a racing car driver and was wealthy, but Mrs Brack was not.

The pre-nuptial agreements that the couple made before their marriage provided that each party would keep their own assets if they divorced. The couple had also agreed that no financial maintenance would be paid to Mrs Brack and that Swedish law would apply in the event of any disagreements about their property on divorce.

The effect of these three agreements were that Mrs Brack would keep £500,000 on divorce whilst her husband would be left with over £10m.

What Did the First Court Say?

Despite the agreements, Mrs Brack made an application for the court to consider her financial entitlement after the divorce. The judge questioned the fairness of the agreements stating "I do not believe it to be fair, after a marriage of this length and with these contributions…for the wife to be left with almost nothing". However, he found that Mrs Brack had understood that she would be bound by the terms of the agreements she had signed with her husband and so the judge made an order, which was limited to meeting Mrs Brack's financial needs.

What Did the Second Court Say?

Unsatisfied, Mrs Brack took her case to the English Court of Appeal arguing that there was no valid reason why the court could not make further financial provision for her and that the judge was wrong to restrict her award to her strict financial needs.

The Court of Appeal heard her case in November 2018 and ultimately agreed with Mrs Brack's arguments. It made it clear that the existence of a valid pre-nuptial agreement should not necessarily lead to the first court limiting an award to her strict financial needs. The existence of an agreement is only one of the factors that the court should consider when exercising its discretion, and the first court was wrong to have not taken into account all the factors in the case.

Mrs Brack's case will now be returned to the original judge to consider what further provision should be made for her from her husband's fortune. However, the Court of Appeal judge still urged the parties to try and reach an agreement outside court.

What Does This Mean for Couples Considering a Pre-Nup?

This case emphasises the need for pre-nuptial agreements to be properly drafted, with thorough consideration being given to whether the terms of the agreement are fair for both parties, whatever the length of the marriage. This is particularly important for international couples agreeing which country should deal with any future divorce, and legal advice should be taken well in advance of the marriage.

The case also demonstrates that even if there is a valid pre-nuptial agreement in place, the court still has ultimate discretion to make alternative orders which can override the agreement by taking into account all the relevant factors in a case. A note of caution though should be sounded, as a court will usually only interfere with a pre-nuptial agreement if this is required to meet a party's overall financial needs.

Will the Law Change in This Area?

The story may not end with Brack v Brack though, as the power of the courts to override the enforceability of pre-nuptial agreements is currently under the spotlight.

Baroness Deech’s Divorce (Financial Provision) Bill went through the committee stage in the House of Lords recently, which includes a provision that pre-nuptial agreements should be treated by the courts as binding, provided that certain conditions are met. Those conditions do not require the court to find that the terms of the agreement are fair. The bill, if passed, would take the court's power away to interfere with a pre-nuptial agreement and provide more certainty for couples entering into these sorts of agreements.

Would That Be a Good Thing?

For couples wanting certainty about the future, being able to rely upon the enforceability of a pre-nuptial agreement has obvious attractions. However, a practical problem with these types of agreements is that time does not stand still, so what may seem fair before a couple marry may appear less so, many years later, often after children have been born and raised. Particularly if one of the couple has given up work or reduced their working hours to help care for the couple's children.

How We Can Help

As things stand, the court has the power to override the terms of a pre-nuptial agreement, so it is vital to receive specialist advice if you are drawing up a pre-nuptial agreement so that you avoid unnecessary pitfalls and create the best agreement for you. With the prospect of possible change in the law on the horizon, it is particularly vital to seek specialist advice.

For further information, please contact Sam Hickman in our Family Law team on 0117 314 5435, or complete the form below.


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