Prenups: Not What They Used To Be

When, back in 2010, my firm got the news we had won the biggest case in the history of family law, eight Supreme Court judges to one, it generated a combined whoop of jubilation that could be heard across the Temple from Lincoln’s Inn to the Thames. After over a century of being considered void and contrary to public policy, we had, after a three-year battle through the highest courts of the land, made prenuptial agreements work in England and Wales. To most of the people reading about the Radmacher v Granatino case when it hit the headlines, the biggest news was that prenups hadn’t worked before. It was a complete shock for most to learn an agreement freely entered into by two people to regulate their affairs and agree the distribution of their wealth in the event of divorce was, unlike almost any other contract, unenforceable. For those who had them, mostly foreign nationals unaware of this almost exclusively English eccentricity, it was inconceivable that their perfectly formed European, American or Australian prenups had only just acquired some real value. Prior to this, their prenups would have been barely worth the paper they were printed on. By virtue of their living in England, the contract upon which they had based their marriage had become a mere factor to which the courts could have regard, but to which they could choose to give little or no weight. London has been called the divorce capital of the world since the English courts started doling out multiple millions to spouses who may have done little more than enjoy an indolent lifestyle and, in some cases, behave very badly indeed. The massive financial exposure implicit in the act of marriage has led leading practitioners to advise against it from a financial perspective. For people on their second marriages, with children of former unions or hard-earned fortunes to protect; for parents watching their own children marry with the prospect of a big divorce payout eating into their inheritance; for hedge fund managers needing to know that the stake from their co-investors is not going to dissipate like mist after an infelicitous union, marriage became a threat rather than a cause for celebration. Now that prenups (and postnups) work, we can again advocate marriage, provided we put in place the appropriate agreement. That agreement still has to be carefully crafted and executed. The essence of the Radmacher decision was that both parties knew what they were signing up to, advised, as they were, jointly by a notary as was the usual practice in continental Europe. However, as borne out by recent decisions following that judgment, for a prenup drawn up in England at least, both parties should have independent legal advice. There should of course be no duress or undue influence. There should be a reasonable cooling off period – shotgun prenups are outlawed. Most contentiously, the effect of the prenup, at the point of enforcing it, must not be unfair. There is debate about what this means, but it certainly includes not leaving one party destitute while the other lives in opulence. There is an art to making sufficient provision so the prenup will be deemed fair, while protecting the main body of the assets. **A Delicate Procedure** The drawing up and negotiation of the agreement has to be handled with the greatest delicacy and diplomacy. It would be disastrous if having a prenup soured relations between decent people with the best intentions. It is vital lawyers deal with the matter with respect and deference to what is to be, essentially, a happy and loving event in two people’s lives. Prenups are about facilitating marriage and avoiding conflict if the couple eventually parts. It needs to be made clear that, as I said in my statement outside the Court of Appeal, the merit of a prenup is that the couple can decide together in the best of times what will happen in the worst of times. It is about autonomy, two people taking responsibility together for how they will manage things between them rather than giving the courts a blank cheque to make their own determination. The long and distinguished tradition of the marriage contract, ingrained in the culture of European aristocracy and monied families for countless generations, is alive again in England. The bottom line is: prenups now work and it’s worth having one, but make sure you get it right. This is both so as to make it work and so as not to damage the relationship that it is, ultimately, at its core. [www.vardags.com](http://www.vardags.com)