Pragmatic romanticism

Posted: 30/12/2019

A firm of solicitors recently commissioned a survey about the likelihood of members of ‘Generation Z’ (those born from 1996 onwards) entering into a pre-nuptial agreement before marriage. Of the 2,064 18-24 year olds surveyed, 42% of woman stated that they were likely to sign a pre-nuptial agreement, as did 36% of men.

Although it is encouraging that many individuals see the benefit of a pre-nuptial agreement, the majority (according to this survey) still do not. Why is it, in 2019, that this is still the case? As family lawyers, we often hear reasons such as:

‘It’s unromantic. It isn’t necessary. It isn’t even legally binding’.

Whilst on the face of it, these comments are true, there are counter arguments to be considered:

• a pre-nuptial agreement is just a contract, between two consenting adults, regulating the worst case scenario. Taking steps to avoid a drawn out dispute on separation, to preserve your future relationship with your ex-partner, has a sense of romanticism, albeit not in the typical ‘Cinderella’ story type of way;
• whilst the hope is that recourse to the agreement will never be necessary, couples do separate, and it is far better to have some awareness of what the outcome may be, rather than descending into financial uncertainty. A pre-nuptial agreement is, in a sense, similar to home insurance; it is put in place ‘just in case’ of a rainy day, and we never really want to use it. If required, we would be grateful the insurance (or agreement) exists;
• it is correct that a pre-nuptial agreement is not automatically enforceable, but they can be upheld, and certainly, the existence of an agreement is a factor that the court will take into account when considering an overall financial settlement on divorce.

A number of cases in the last ten years have helped to provide some clarity around the process of entering into and upholding a pre-nup.

For the agreement to be binding, it must be ‘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’ (Radmacher v Granatino [2010] UKSC 42).

To assess whether an agreement was freely entered into, there must be no undue influence, fraud, misrepresentation or pressure. In Hopkins v Hopkins [2015] EWHC12 the wife argued that she should not be held to the terms of an agreement for this very reason, stating that she felt ‘intimidated’ to agree its terms. The wife had received ‘copious amounts of specialist matrimonial advice’ as to the implications of the agreement, and entered into it anyway. There were other factors that the court considered, but it was held that there was no duress, and the agreement was afforded weight as part of the discretionary exercise under Section 25 of the Matrimonial Clauses Act 1973.

For both parties to have a full appreciation of the implications of the agreement, they must have all of the information material to their decision to enter into it. As such, financial disclosure is desirable, though it is not necessary, and legal advice is advisable, though the absence of advice will not automatically prevent the agreement from being upheld. The question is whether there has been a material lack of disclosure or advice (as per Mostyn J in Kremen v Agrest No 11 [2012] EWHC 45). Best practice would dictate that parties do go through the disclosure process alongside a solicitor, as this is likely to indicate that they had an understanding of what they were entering into.

Whether an agreement is fair or not is dependent upon the circumstances as a whole. In the Radmacher case, the court provided practitioners with guidance as to what would constitute a fair agreement: it must not prejudice the reasonable requirements of any child of the family; there is nothing manifestly unfair about ring fencing marital assets; and the agreement must meet the parties’ reasonable needs as a minimum.

Two further counter arguments to consider:

• pre-nuptial agreements are more common in overseas jurisdictions and in many countries, such as France, spouses have to decide on marriage whether they are going to keep their assets separate or share them on divorce;
• for couples who may be due to inherit during a marriage, it will be important to sign a pre-nuptial agreement - indeed their parents may be wary leaving assets if they are going to be shared on divorce. As explained above, the Supreme Court has determined that ring fencing assets is not of itself, manifestly unfair, and doing so may provide some much needed comfort to an individual’s relatives.

There are, therefore, circumstances in which a pre-nuptial agreement will be upheld, and planning for all future eventualities is sensible. Clients are not to be shamed for believing that fairy tales exist (for some, perhaps they still do) but as practitioners, we can encourage clients to see that love stories don’t have to involve glass slippers or horse drawn carriages. They can instead involve a practical approach to ones future, particularly for those who have worked hard to build their own asset base before marriage. Generation Z are often given a hard time in the media – for example, for a tendency to be consumeristic and reliance upon technology) but in this instance, those respondents to the survey who said they were likely to sign a pre-nup are to be commended for their pragmatic views on relationships and their futures.

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