Judges say that they will ignore pre-nups unless couples are rich, warned the Daily Mail yesterday morning. Just to unsettle even more all those who may have recently entered into or be contemplating a pre-nup, the headline went on to proclaim that the “majority of agreements are a waste of time”.
Family lawyers must have missed a pretty ground-breaking change in legislation for this to be the case because, as far as we all know, the Supreme Court decision in the Radmacher v Granatino decision back in 2010 is still good law. That case provided that the test to be applied in determining whether pre-nups should be upheld is as follows:
“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement”.
So where did the Daily Mail get its inside information from? The answer is from the guide just issued by the Family Justice Council on “Sorting out Finances on Divorce” which is designed to help those navigating the family justice system without the assistance of lawyers.
Interestingly, the guide specifically states that it does not deal with the situation where a couple has entered into a pre-nuptial agreement and pre-nups are only briefly dealt with in the FAQ section of the guide (there is just one paragraph dedicated to them).
The guide explains that the ultimate test for determining whether a pre-nup should be upheld is one of fairness and that the courts will not regard an agreement as fair if it does not meet needs. That follows from the Radmacher decision.
However, there are all sorts of circumstances and considerations that will be taken into account in determining needs. It is not, as the Daily Mail has suggested, a case of “trying to make sure both parties live as closely as they can afford to the lifestyle they enjoyed before their divorce”.Case law provides that needs do not need to be subjectively interpreted (ie they do not necessarily have to mirror the lifestyle enjoyed during the marriage). In addition, the courts will look at other factors such as the length of the marriage and whether there are any children.
Couples choose to enter into pre-nups for all sorts of reasons. Often young couples, who do not yet have any wealth in their names, are encouraged to do so by parents who wish to ensure that future bequests are protected. Equally, couples who may not have the benefit in the future of a windfall may wish to protect the basic assets that they have acquired in the event that they only enjoy a short, childless marriage. Often couples who have very limited wealth wish to enter into a pre-nup simply because they hope that one day the legislation in England and Wales may catch up with many of our European counterparts and enshrine the binding nature of agreements in our legislation.
Many couples wish to be able to choose to regulate their financial affairs in the way that they choose, and indeed the courts encourage people to exercise their autonomy in deciding their financial futures. Pre-nups are not the answer for everyone and it is right that there will be situations where, in the absence of enough surplus wealth to meet needs, a pre-nup cannot be upheld. But it is equally important that scaremongering headlines do not deter people who would like to have the autonomy to decide how to arrange their finances in the event of a marital breakdown from doing so. Every couple is different and there is not a “one size fits all” solution to determining whether pre-nups should be upheld.