InvestmentsOct 5 2020

Why prenups are taken more seriously

  • Describe the significance of the Radmacher case on prenups
  • Explain the significance of prenups
  • Describe why more people are using them
  • Describe the significance of the Radmacher case on prenups
  • Explain the significance of prenups
  • Describe why more people are using them
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Approx.30min
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CPD
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Why prenups are taken more seriously

The key to drafting a good prenuptial agreement is to find out what the parties want at the outset. Where is the momentum coming from to have one in the first place? Does it come from a parent/family trustees – as was the case in Radmacher – to protect family money, making it clear that without a signed prenup before the marriage the child/family member will not receive any further part of the family wealth? 

Or is it to protect a particular asset, such as a business built up by previous generations of the family?  Or has one or both of the parties been married before and does there remain an obligation to be fulfilled, such as the cost of paying for private and/or tertiary education for any children of a previous marriage/relationship?

It should be possible to accommodate these objectives, whilst at the same time defining the provision to be made so that it avoids falling into the “predicament of real need” category. 

It need not provide actual figures but can say, for example, that only if a combination of any separate property retained by a spouse, together with his or her share of marital property built up during the marriage, is insufficient to provide for their housing needs, will a contribution from the wealthier spouse be forthcoming.

Judicial discretion

As mentioned above, no matter how deft the drafting of the prenuptial agreement or however creative its provisions, such contracts are not enforceable automatically or binding on the courts in England and Wales. 

Unlike their commercial counterparts, only a judge can uphold its terms or, if finding that its effect is not fair, substitute different provisions to achieve fairness.  Even then, the revised provisions may still be a long way short of the award that would be made on divorce without a prenuptial agreement.  

It was not that long ago that prenups were disregarded by the courts entirely on the grounds of public policy. They were seen as undermining the institution of marriage itself. 

We seem to be out of step with many European jurisdictions and States in the US in refusing to uphold prenuptial agreements and that may be because the United Kingdom has no written Constitution or Bill of Rights that enshrine basic rights, such as the right to have contractual relations upheld. 

Many would say that our law affords a fairer and more flexible approach when trying to regulate the most personal of all human relationships. The downside is that it can make the outcome of any judicial review, as to the terms of the prenuptial agreement, at times, unpredictable. 

Summary

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