The death of romance? The growing popularity of 'pre-nup' agreements

Published: 4th November 2009

A pre-nuptial agreement, or 'pre-nup', is a contract entered into prior to a marriage or civil partnership by people intending to marry or contract with each other. The content of the agreement is determined by the parties and can vary widely. However, it usually provides for the division of assets, the provision of financial support or forfeiture of certain assets on divorce or dissolution of the civil partnership.

A recent ruling in the Court of Appeal has reinforced the growing popularity and value of 'pre-nups' in this country. At present, the law in England and Wales is that the parties are not bound by such agreements nor can they oust the jurisdiction of the court to achieve a fair outcome when determining parties' financial affairs on divorce. However, the court will give weight to a 'pre-nup' as one of the circumstances of a case and, as the case below illustrates, they can be extremely persuasive in certain circumstances.

The case involved a German heiress, Katrin Radmacher, who is one of Germany's richest women. She married Frenchman Nicolas Granatino, who is a former investment banker, in 1998 in the UK. They entered into a pre-nuptial agreement in Germany before they married in which Mr Granatino agreed not to make a claim against Miss Radmacher's £100 million fortune if they divorced. Such contracts are enforceable in France and Germany. The parties divorced in 2006 and last year the High Court awarded Mr Granatino £5.8 million. However, The Appeal Court recently overturned that decision primarily on the basis of the 'pre-nup'.

Miss Radmacher's case illustrates the increased interest and demand for 'pre-nups'. There was a time when such agreements were considered to be only for the super rich. However, they are growing in popularity as more people get remarried and younger professionals marry later in life and bring assets with them into relationships that they wish to protect.

Couples considering entering into a 'pre-nup' need to be aware of the circumstances in which such agreements are considered to be persuasive by the courts. For example, they can carry more weight if a marriage is short and no children have been born. This is because the parties' circumstances may not have changed dramatically from when the agreement was signed. If the marriage lasts longer, and there are children and the associated financial responsibilities, then a 'pre-nup' could be less effective.

There are also other considerations: the court would want to know that there had been a full and frank exchange of financial information between the parties before they entered into the agreement and that they had both obtained independent legal advice. There would also have to be a sensible gap between the agreement and the wedding.

If you are considering a 'pre-nup' or if you need any family law legal advice contact any member of the Mace & Jones family team in Liverpool on 0151 236 8989, Manchester on 0161 214 0500 or Knutsford on 01565 634234.