Pre-Nuptial Agreements – soon to become legally binding?

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Pre-Nuptial Agreements – soon to become legally binding?

10 Feb 2014

The Law Commission is set to publish a report on Matrimonial Property, Needs and Agreements on 27th February 2014.  It has been widely reported that in this report, the Law Commission will recommend that Pre-Nuptial Agreements (“pre-nups”) should become enshrined in law as legally binding contracts.  Keep an eye on our website for more information following publication of the report.

Nuptial Agreements

Pre-Nuptial and Post-Nuptial agreements are marital agreements which set out how assets should be divided in the event of a permanent breakdown of the parties’ marriage or civil partnership.  The intention is to avoid costly and often emotionally demanding litigation in the event of divorce or dissolution.

A nuptial agreement may be particularly important where there is an imbalance in the respective wealth of the parties, or where one party wants to safeguard particular inherited or family assets.  Nuptial agreements may also be of particular benefit for couples marrying for the second time who have acquired assets independently from each other and want to protect these assets before re-marriage or for the sake of their children.

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Although currently not legally binding in the same way as a commercial contract, a flurry of recent case law has demonstrated the courts’ growing acceptance that pre-nups (and post-nups), if properly entered into and provided certain conditions have been met, should be honoured when the relationship breaks down.

In the recent case of BN v MA [2013] EWHC 4250 (Fam) the Judge gave the following rationale for enforcing the parties’ pre-nup:

“…the principal object of the exercise in this case (as indeed in every case where a nuptial agreement is signed) is to avoid subsequent expensive and stressful litigation; and it is for this reason, as will be seen, that the law adopts a strict policy of requiring the demonstration of something unfair before it will open the Pandora’s Box of litigation where there has been an agreement of this nature.”

In essence, where a pre-nup has been entered into with open eyes and both parties have received separate and independent legal advice, the court will need a very good reason indeed to stray from the terms of the agreement.

It is now hoped that the law will go one step further and begin the process of enshrining pre-nups as legally binding contracts.  The Law Commission’s report will no doubt be awaited with baited breath by practitioners and members of the public across the country.

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