The story about the billionaire owner of the Chrysler Building, Michael Fuchs, and his wife, who have been embroiled in proceedings in the High Court in London following their separation, has been circulating the news recently.
The couple had signed a pre-nuptial agreement in 2012 that was subsequently modified, but the case was still being bitterly fought in court over the interpretation of its terms.
How could this be if there was a pre-nuptial agreement in place?
Well, that is because pre-nuptial agreements in England and Wales are not technically legally binding, and are still only considered as one of the factors of the overall case.
This is an unbelievable statement to be making in 2022. How can it still be the case that on the face of it the law does not openly allow two sensible consenting adults to arrange their own affairs after divorce?
However, the only saving grace we currently have is that if they are entered into properly, then they should carry significant weight.
Intended spouses from wealthy families often have pre-nuptial agreements. Often it is because there is the prospect of a significant inheritance, or a family company is considering restructuring due to inheritance tax advice and planning that older members of that company have received.
Frequently it is because an intended spouse is an entrepreneur and wants to protect the growth and ultimate sale of their company that they have worked extremely hard to conceive and grow.
So, how does a high-net-worth couple obtain an agreement that gives them as much protection as possible? They get experienced lawyers.
The main guidance was established in the Radmacher vs Granatino case back in 2010. In all fairness the law has not really progressed much since then.
So what practical points can a couple consider when thinking about a pre-nup?
1. The agreement must have been entered into freely. Put plainly, there cannot have been any undue pressure. The most common example of this is the case of the family with significant wealth 'pushing' the agreement on the other financially less well-off half of the couple.
Comments like 'this wedding will not go ahead without this' are well-advised to be kept under wraps.
2. The agreement should be signed off and consigned to a drawer, at least 28 days before the date of the wedding. The closer it gets to the date of the wedding, and the more difficult it is to pull out of the arrangements, the less weight will be added to an agreement if it is subsequently challenged.
Imagine the embarrassment of having to cancel hundreds of guests and service providers at the last minute.
3. The couple must each understand what they are entering into. That is why it is always wise for both halves of the couple to have the same level of advice. It is very unfair for the richer half of the couple to have a very experienced city lawyer, while the other has a lawyer who rarely deals in these types of agreements.