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Pre-nup's and Pitfalls
Tuesday 30th March 2010
Despite the growing trend in pre-nuptial agreements across Europe and celebrities in the limelight such as Angelina Jolie and Brad Pitt consenting to separation agreements, the Brit’s still seem squeamish about family law and financial planning.
Everything we do in life is tied up in contracts and disclaimers - we take out life insurance as a sensible step in case the worst happens, employers draw up official contracts in order to ensure they gain the best from their staff and yet, when it comes to marriage and family we tend not to take sensible steps in planning the future.
The possible divorce of Cheryl and Ashley Cole could demonstrate the value of pre-nups. Ashley chose not to insist on a pre-nup. Although Cheryl is worth an estimated £6 million in her own right, Ashley's wealth is much higher and mostly accrued during the marriage leaving the way open for Cheryl to seek a substantial settlement from Ashley.
Upon their marriage in 2006, when questioned about pre-nuptial agreements, Cheryl told the press: "We're getting married because we are committing ourselves to each other. We are a work in progress and we are going to build our married life together."
Government statistics state that nearly half of marriages end up in divorce. Many people now tend to marry later in life and enter into second marriages of which statistically have a 70% failure rate . It would therefore seem sensible for prospective spouses to be allowed to agree how finances should be dealt with in the unhappy event of their marriage breaking down.
In English law however, pre-marital agreements are still regarded as invalid, un-enforceable and against public policy. England is largely alone in this and against the majority of European countries including Scotland, most of which recognise pre-nuptial agreements, but law professionals believe a change may soon be upon us.
Libby Daultrey, solicitor at Marsden Rawsthorn commented: "Changes may be on the horizon for England as the law commission has recently announced its intention to examine the status and enforceability of pre-marital agreements."
English courts, in recent years, have increasingly been willing to give weight to such agreements as one of a range of factors to consider in the exercise of the courts discretion. In the recent high profile divorce of Katrin Radmacher and Nicolas Granatino, the weight to be given to pre-marital agreements was tested in the court of appeal.
Radmacher, a wealthy German heiress, married Frenchman Granatino in England and most of their married life was spent in England. When their 8 year marriage broke down in 2006 their divorce was dealt with in England. On marriage Radmacher's father had insisted upon a pre-marital agreement to protect her inheritance, which is normal practice in Germany. In the agreement, Granatino agreed not to make any claim against her fortune if they divorced. However, upon divorce, the court awarded Granatino a £5.8 million settlement. Katrin Radmacher successfully appealed and the settlement was reduced substantially.
Appeal judge Lord Justice Thorpe said it had become "increasingly unrealistic" for courts to disregard pre-marital agreements and stated there was a risk of England and Wales becoming isolated against the common law of other countries.
The guidelines for fairness have been judged by the courts to comprise three main factors as Libby explains, "Firstly, each party has to have taken independent legal advice and understand the implications and effect of entering into such an agreement. Secondly, each party has to have fully disclosed their assets to each other and finally, neither parties paperwork is done under pressure."
Libby continued; "An interesting addition to the armoury of securing family assets is the Post-Nuptial Agreement and this I feel will become very popular in England. Post-nuptial agreements can regulate finances during the course of a couple's marriage and this agreement can be valid and enforceable in UK law."
Post-nuptials can give married couples the power to make financial arrangements between themselves and secure their own protection in the event of a divorce, thus saving a lot of hassle and stress for both parties. Libby advises anyone unsure of whether to draw up a pre-nuptial agreement to consult a specialist, "If you feel you might have assets that need protecting then it’s definitely worth consulting a lawyer that specialises in Family Law to ask for advice on how to proceed before entering a marriage." If you would like any advice on pre or post nuptial agreements please contact our family team on 0800 294 4410.
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