Pre-nuptial and Pre-registration Agreements

Agreements that partners make before they get married or register a same-sex civil partnership are commonly referred to as pre-nuptial agreements and pre-registration agreements respectively. They typically deal with how the partners will hold their property during their marriage or civil partnership and what should happen to their property and maintenance payments after a divorce or dissolution of the civil partnership.

General
How to make an Agreement
Upholding the Agreement on Divorce or Dissolution
Are they worth it?

General

There is no Act of Parliament on pre-registration agreement for civil partners or pre-nuptial agreements for spouses. Pre-nuptial or post-nuptial agreements are not binding in English contract law because on a divorce or dissolution of the civil partnership the court has power to make financial orders, which the spouses or civil partners cannot contract out of. However, the Supreme Court in 2010 gave guidance that the courts should uphold such agreements provided certain conditions are met.

English law does not really know a “property regime” as other jurisdictions do either. If analysed, however, spouses and civil partners in this country hold property separately and are not for example liable for each other’s debts. On a dissolution of a civil partnership or on a divorce the court has a discretion to make any orders to pay lump sums, transfer property, share pensions or for maintenance payments as is fair (more on the page on financial orders). The court has a similar discretion to make provision from the estate of a deceased civil partner or spouse for the survivor.

On an application for financial provision as part of a divorce, nullity or dissolution proceedings, the court needs to take into account all the circumstances of the case. What that means is a matter for continuous debate. There have been significant changes to this through decisions of the Supreme Court over the last decade. The interpretation of the law may therefore be quite different at the time your marriage or civil partnership may end. It would be idle to speculate on all possible scenarios for that time for these reasons.

How to make an Agreement

When the agreement is made, the following conditions must be met:

The parties must have entered into the agreement out of their own free will free from undue influence or pressure and any other such factors which would make a contract unenforceable, but beyond this free from other influences which could have overborne one party’s free will, such as unconscionable conduct or the abuse of a dominant position. Independent legal advice can go a long way to rebut such an argument.
The parties must have been informed about the implications of the agreement. This is usually done by independent legal advice.
The parties must have had knowledge of the material facts. This usually means full and frank financial disclosure. The courts may uphold agreements even if only the broad parameter about the other’s finances were known.

If the agreement is unfair from the beginning, this will reduce its weight. It is unclear what this means in practice.

There is no prescribed form for a pre-registration or pre-nuptial agreement and each agreement will need to be tailored to the particular circumstances of each couple. In many ways, the more it has been tailored, the more likely it is to be upheld. The costs are therefore not fixed, as they would be for a will or conveyancing and they can be considerable. You should also think about this early as it will take several weeks to finalise the agreement and it is good to leave a cooling-off period between signing the agreement and the wedding or civil partnership registration.

A traditional adversarial approach to drafting these agreements where drafts are posted between solicitor feels uncomfortable to many couples who are at that time very much in love and want to spend the rest of their lives together. Therefore couples who opt for the collaborative law process find that this suits the situation much more. Here both parties meet with both their solicitor and all negotiations happen in meetings with all four of them. This also ensures openness and a level-playing field.

Upholding the Agreement on Divorce or Dissolution

If the court is asked to consider whether to uphold an agreement on divorce or civil partnership dissolution, it will consider whether it is still fair then. The fact that the parties entered into an agreement can change what the court regards as fair, for example because both parties wanted to exclude inherited property.

The needs of any children will need to be met, whatever the agreement provides.
The real needs of a party will also outweigh an agreement to the contrary. It is possible though that the way the needs are assessed may be different in the presence of an agreement.
A mere change of circumstances does not make the agreement unfair: in a long marriage or civil partnership circumstances will inevitably have changed.
If in a long marriage or civil partnership the agreement excludes any sharing of the assets acquired during the marriage or civil partnership through the parties’ joint effort, which happen to be in the name of one of them, this would probably be unfair. The courts regard looking after the home and the family as a contribution equal to the gainful work of the breadwinner, so both are regarded as having contributed to the assets acquired during the marriage or civil partnership.
In a similar way, the party who does not have any assets because she devoted herself to being the homemaker is entitled to compensation for her loss of career.
If the agreement excludes sharing inherited or pre-owned assets, there is nothing wrong with that in principle.

Even if the court finds that upholding the agreement in its entirety would not be fair, the presence of the agreement could, however, limit the claims.

Are they worth it?

The Supreme Court has firmly endorsed pre-nuptial and pre-registration agreements and even if they are not upheld in their entirety, they may have a strong influence on the financial provision the court may make on a divorce or civil partnership dissolution many years later. Therefore, if you want to avoid having to share all your wealth with your partner, making such an agreement may be money well spent. Having an agreement that both partners subscribe to can also mean that you may not even argue about the issues later on and would be more likely to have an amicable separation.You can of course also agree that in case of a disagreement you will try mediation.

Since there are no prescribed rules for these agreements there is no real difference between an agreement made before the wedding or civil partnership registration and one made later. Of course if you wait until after the wedding or registration, your partner may no longer agree to sign an agreement.

For advice on your specific circumstances contact Andrea Woelke at Alternative Family Law: ring or email us.

October 2010

Alternative Family Law

Finances