Sarah Balfour is a Partner in the Birmingham team at Irwin Mitchell Private Wealth. She is passionate about pre and post-nups and has spent the last 13 years advising the region’s families on how to approach these sorts of agreements. Here she discusses the common question, are pre or post-nups worth the paper they are written on.
It’s now 8 years since the case of Radmacher was heard by the Supreme Court. This was the case that changed the landscape in relation to prenuptial agreements – and yet I’m still often asked “is a pre-nup worth the paper it’s written on?”
And I answer, “Yes, a pre-nup can often carry a lot of weight. But it depends what it says and how it was entered into….”
As with many aspects of family law there are misconceptions and myths. For example, the myth of the “common-law spouse”. Living together for a certain period does not automatically give people the same rights as a married couple. Also, the “quickie divorce” – there’s no such thing as that either, whatever the media may tell us.
In a world of misinformation and “fake news” it’s understandable that people don’t know much about the realities of pre-nups. Not so very long ago they were considered unromantic, and reserved for Hollywood A-listers.
This is no longer the case. If done “right” pre-nups can be incredibly useful and can avoid the acrimony and uncertainty that come from the end of a marriage.
If a couple divorces without a pre-nup (or a post-nup – which is an agreement reached after the date of the marriage), the court has a very broad discretion to make financial orders. It can, for example, transfer properties from one person to the other, order the sale of a business or home and/or split pensions between the couple. It can order lifelong maintenance payments to be made from one person to the other. In coming to what it considers to be the right outcome, the court takes into account all the resources available. This can include inheritances, whether these came in before the marriage, during it, or after separation. What the court believes to be the right outcome, might not be not what either party would have chosen.
A pre or post-nup allows a couple to exercise autonomy and to set the boundaries. As long as each party comes out with enough to meet their needs, they can agree to protect things like family businesses or inheritances. A couple can also agree a clean break i.e. that the financial ties between them come to an end.
For a pre-nup to carry weight both people have to enter into it freely; they each have to take their own legal advice and the agreement has to fall within the parameters of overall fairness. It can’t therefore provide that one person gets everything and the other receives nothing.
The court will not uphold a pre-nup which is so clearly unfair that it leaves one party in financial dire straits. A judge might instead alter the pre-nup to ensure there is a fair outcome, but this award might still be less generous than if there had been no pre-nup at all. The court is generally prepared to respect the fact that the parties have chosen to have their own agreement, and it tries not to trespass on this any more than is strictly necessary.