The August bank holiday weekend saw Petra Ecclestone, daughter of Formula One tycoon Bernie Ecclestone, get married at a lavish ceremony in Rome. With the wedding alone costing a reported £5m, it is no surprise that she and her husband James Stunt admitted to signing a pre-nuptial agreement earlier this month.
Pre-marital contracts have seen a rise in popularity in the UK, with high profile divorces, such as Mills v McCartney, highlighting the risks of not having a pre-nup in place. In addition, people now tend to get married later in life when they have accumulated more wealth and therefore have more assets to protect.
However, under current UK law these agreements are not legally binding in England and Wales. Judges can choose to overrule the agreements and not take the content into account when deciding how to divide property or award maintenance following a divorce. The courts are compelled to acknowledge all relevant circumstances upon divorce and can choose to ignore an agreement completely if it does not seem to be fair. But this is set to change.
In a groundbreaking case last year the UK Supreme Court decided to uphold the pre-marital agreement in the case between German heiress Katrin Radmacher and her husband Nicholas Granatino. Whilst this case didn’t explicitly state that pre-nups are now legally binding, it did add weight to the argument in favour of such agreements.
In addition, the Law Commission is due to report in 2012 on whether new legislation should be passed to ensure prenuptial agreements are fully enforceable.
The consultation paper will take into account factors such as the need for both parties to have independent legal advice, for there to be full disclosure of financial positions, for the agreements to be in writing and for them to be made a minimum of 21 days before the wedding. The last one is to avoid undue pressure – “sign this or the wedding is off…”
The most common terms in the agreements provide for division of property and spousal support in case of breakdown of the marriage. They should be updated for changes in circumstances, such as the birth of another child, and can also include terms providing support upon the death of one party.
At the moment pre-marital contracts are often drafted before second marriages, particularly where there are children from the first marriage. By entering into an agreement certain assets can be excluded from the ‘matrimonial pot’ to ensure that children’s inheritances are left intact in the event of divorce or death.
Under UK law, the welfare of children is paramount and if the agreement does not provide appropriately for children, the court may well refuse to accept it as a whole or in part. Consequently a good pre-nup should be drafted to cover the issue of children, whether already born or conceivable in the future.
It is also possible for ‘ante-nuptial’ agreements to be prepared after the wedding if you miss the time limit.
Based on my own experiences in family law, pre-nups are complex and intricate documents, requiring considerable thought and attention to detail. For example, if gifts are received from parents upon marriage or from family members trying to avoid inheritance tax, these issues need to be considered. If drafted poorly they could cause more problems than they sought to avoid.
Whether you love or hate the idea, they are coming, either via the courts or via legislation. They may not be very romantic, but then neither is spending time in court and money on legal fees where this can be avoided.
For further information please contact a member of our Private Client team on 01625 442100.