Prenuptial agreements are not legally enforceable in England and Wales. If a couple get divorced in this country, the court retains its discretionary powers to redistribute their income and capital resources, taking account of all the circumstances in the case (of which the prenup will be one), so as to achieve fairness between the couple.
There is no legislation about prenups, so the law has developed through case law, i.e. decisions made by judges in the higher courts, which is binding on the lower courts, culminating in the very important decision of the Supreme Court (the highest court in the land) in the case of Radmacher v Granatino, in 2010. The main point of principle established by that decision is that “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 the agreement.”
The decision of the Supreme Court represented a significant development of the law concerning prenups and there is now a rebuttable presumption where the parties have entered into a prenup that it should be upheld, unless holding both parties to the terms of the agreement would be unfair.
Observing accepted good practice when preparing a prenup (adopting recommendations made by the Law Commission in February 2014) will mean that your prenup is more likely to be upheld as being fair by the court, in the unhappy event of a future divorce. Good practice requirements include: both parties having independent legal advice; a frank exchange of information about both parties’ financial resources, i.e. income, assets and liabilities; and allowing sufficient time for their negotiations, culminating in signing up to the agreement at least 28 days before the wedding.
It is clear from the decision of the Supreme Court in Radmacher and other subsequent court decisions that whilst a prenup can be used to prevent a claim to share all the assets of the marriage, the overarching requirement for the court to achieve fairness between the couple means it is not possible to use a prenup to deprive the economically weaker spouse of his or her financial needs, or right to be compensated for financial disadvantage generated by the way in which the couple arranged their finances during the marriage. This means that the court is only likely to uphold the terms of a prenup in its totality in the bigger money cases, not cases involving modest wealth, where the parties’ financial needs are likely to be the determinant factor to the outcome of the case.
Prenups are particularly appropriate and likely to be effective in situations where for example, one or both of the couple have substantial pre-acquired wealth that they wish to protect; where one or both of them wish to ring fence inheritances received before the marriage, or which they expect to receive during the marriage; where there are substantial trust assets, especially those derived from gifts or inheritances; or with second marriages between mature couples who want to preserve their pre-acquired wealth for the benefit of their children by previous marriages/relationships.