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3 Requirements of a Valid Pre-Nuptial Agreement

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10th July, 2020

The recent decision of S v H [2020] highlights the important position that signing a pre-nuptial agreement does not necessarily mean that is the end of the matter, and the parties are bound by what is contained within the agreement.

The decision of HHJ Booths emphasis the three fundamental requirements, derived from the case of Radmacher v Granatino [2010], that must be in place in order for prenuptial agreements to be valid and binding on the parties; (1) the agreement is freely entered into by each party, (2) the parties entered into the agreement with full appreciation of its implications and (3) in the circumstances prevailing, it must be fair to hold the parties to their agreement.

Background

The Wife was 56 and the Husband was 69, the parties met in 2010 and decided to marry quickly on 08 June 2010. Both parties had previously been married and divorced. The Wife had three children; two twin daughters (who were 11 at the time the parties married) and an older son. The husband had an adult son living in the UK.
The Wife was a successful professional business woman, and the financially stronger party with accumulated assets of £3 million and a net income over £100,000 per annum. On the other hand, the Husband was employed part time in the Wife’s business, but his main responsibility was to look after the Wife’s twin daughters. He had no assets after transferring all his capital assets to his first wife and had no income. At the time the marriage broke down, the husband had accumulated substantial debts and was subject to a bankruptcy order.

Pre-nuptial Agreement

On 03 June 2010, five days before the wedding which took place abroad, the parties signed a pre-nuptial agreement drafted by a local notary. Before signing the agreement neither party took legal advice and formal disclosure of the parties’ respective financial positions was not undertaken.
The parties gave a “dramatically different account” of how they entered into the agreement. The Husband stated that “he was taken by surprise” after being “summoned to a notary’s office”. He was asked to record his assets, but once he declared that he had no assets, a different agreement was quickly drafted by the notary. By contrast, the Wife’s account was that there had been prior discussions of the agreement; they both agreed that they would keep what they had and there would be no mixing of assets of their future property.

Decision

HHJ Booth held that that the pre-nuptial agreement had no value as neither party had independent legal advice (the only advice given was by a notary who prepared the agreement) and there was no formal process of financial disclosure. Therefore, this emphasis the importance that in order for parties to fully appreciate the implications of a pre-nuptial agreement they need to have the benefit of legal advice and a clear understanding of the other party’s financial position. How can a party have a full appreciation of the content and impact of the agreement if they are denied sight of the financial landscape of the marriage?
HHJ Booth also stated that even if it was decided that the pre-nuptial agreement was valid as to the circumstances of its creation, it would carry no weight as it left the Husband in a position of real need, and the only way to alleviate the Husband’s need is for the Wife to provide for him, which would have been contrary to the prenuptial agreement.
As a result, HHJ Booth ordered the Wife to pay a sum of £675,000 to clear the Husband’s debts and the Husband would receive a mortgage free property on trust (which would revert to the Wife upon the Husband’s death) and 60% of the Wife’s pension.

What have we learnt?

The outcome of the case highlights the importance for solicitors to remain alert to the three requirements for a prenuptial agreement to be valid. Not only should the parties seek independent legal advice and freely enter into the agreement with a clear and full understanding of the parties’ financial position, but the agreement must enable a fair outcome, by not leaving the other party in a real need. If any of these requirements are not met then the court can either disregard the agreement altogether or invade it so as to address needs.

Richard Barge

Partner & Head of Family Law
Email: [email protected]
Tel: 01244 455371

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