Big engagements make big news, but as the announcement of Taylor Swift’s pending nuptial hit headlines hot off the back of Cristiano Ronaldo’s, it is helpful to remember that behind the sparkle and celebrations lies one of the more practical details often overlooked by the press: will there be a pre-nup
We look at the importance of nuptial agreements, how they are treated in the court in England and Wales at the moment and the shift in reasons people are getting them.
Why get a Prenup?
Having a nuptial agreement is not just about “protecting yourself”. Increasingly it’s about setting clear expectations on a worst-case scenario basis, and aiming to avoid a dispute later on if a relationship comes to an end. You might draw parallels to taking out house or life insurance. Few people would say they take out building and contents insurance expecting their house to burn down, but they would want to be prepared in the event it does.
Equally, nuptial agreements can protect those outside of a marriage – for example, a promising start-up business with only two directors is liable to be stopped in its tracks if one suddenly needs to transfer or sell their part of their shareholding to a spouse as part of a divorce settlement. Increasingly potential investors are asking whether their key shareholder have a pre nup in place as part of their due diligence.
Do pre nup’s work?
The current position of the courts of England and Wales is that nuptial agreements are not binding. Yet, parties who sign up to nuptial agreements should expect to be held to them. This has been the case since the landmark judgment in Radmacher v Granatino [2010] UKSC 42 – in which Mr Granatino married into a wealthy German family with a “drop hands” agreement (one which excluded any claim against the other’s property acquired prior to or during the marriage), and was held to it on the parties’ divorce, the Court setting out that as long as the below criteria are met an agreement will very likely be considered fair, and the parties will be held to it:
- An agreement is freely entered into by both parties;
- Both parties have a full appreciation of the implications of the agreement; and
- It is fair to hold the parties to their agreement in the circumstances prevailing.
It is easy to see this high bar and think that it means nuptial agreements must surely then be binding. But while the Court will likely hold the parties to a nuptial agreement which is deemed “fair”, parties cannot predetermine the Court’s decision; the nuptial agreement will still only be a factor (albeit significant one) in the Court’s exercise of its discretion.
How then, can parties ensure that their agreement is not dragged out of a dusty drawer in 20 years’ time only for one spouse to try and take it apart through the divorce courts? The answer of course lies in proper legal advice and anticipating what lies ahead for the family. A solicitor can advise on whether any provision even the most imaginative would-be spouse could think of would be likely to be upheld by a Court.
It is also often misconstrued that a financially “stronger” spouse paying in full for the “weaker” one’s legal advice could prejudice an agreement. The truth is quite the opposite – both parties having the best quality independent legal advice at the time is likely to sway any judge of the future toward upholding the terms agreed.
What can prenups cover?
Nuptial agreements come in all shapes and sizes. There are broad principles that they follow, but mostly they end up being a bespoke agreement cut to fit the couple and their financial circumstance. What then, should be considered when drafting an agreement? The headline points to discuss with a legal adviser are:
- what assets and liabilities a spouse already has and will bring to a relationship, and how they can be protected;
- assets and liabilities a spouse may earn or acquire during the relationship, and how they should be treated or protected; and
- what provision should be made upon separation, including housing, maintenance and provision for children.
For celebrities and artists like Taylor Swift, aside from the real property they may have, there could be additional considerations to look at such as intellectual property. For example, how should her song writing royalties be treated and how can they be protected given their longevity and the earning capacity they have in and of themselves.
In summary, some may feel that a nuptial agreement takes the romance out of what is otherwise a very exciting time for a couple, but no more so than the practicalities of making sure you’re covered legally with the venue contract or even deciding what colour socks the groomsmen will wear. Whether you’re a global star or not, a nuptial agreement is less about planning for divorce and more about peace of mind.
