A nuptial agreement is a document, signed by a couple either before or during their marriage or civil partnership, that sets out how their assets are to be split if they separate or divorce. In this article, associate Jenny Bowden and trainee solicitor Alice Russell consider the international relevance of nuptial agreements.
Pre- and post-nuptial agreements are becoming increasingly common, and not only for the super wealthy. Typically, a couple may consider having a nuptial agreement drawn up if:
- there is a large disparity in the parties’ financial positions (or there is likely to be in the future);
- they wish to ring-fence inheritance or family heirlooms;
- they wish to secure provision for children from a previous relationship;
- one party has their own business, which they want to protect;
- there are connections to other jurisdictions; and/or
- one party has previously experienced an ‘unfair’ divorce.
Increasingly, we are seeing nuptial agreements involving international considerations– in our experience, this isn’t usually the main motivating factor in seeking advice, but rather a background factor in light of increasing globalisation. This trend is likely to continue. Many couples own assets abroad or are moving into (or out of) England and Wales from (or to) another jurisdiction or have a presence in several countries at the same time.
One of the main benefits of a nuptial agreement is achieving some degree of certainty, which in turn often enables parties to disentangle their finances and separate amicably, privately and sensibly. This is particularly important where there are children since the co-parenting relationship will need to continue even if the romantic relationship does not. For example, the recent high-profile divorce of Kim Kardashian and Kanye West had the potential to be highly acrimonious, all under the media spotlight. However the existence of a pre-nuptial agreement has ensured that both parties are moving forward without significant ill-will.
Partner Richard Hogwood says “to some extent one could therefore think of nuptial agreements as anti-animosity and anti-lawyer insurance policies”.
How will the English courts treat a foreign nuptial agreement?
Many couples assume that a nuptial agreement drawn up and legally binding in one country will automatically be binding in any other, including England and Wales. That is not the case. No matter where it is drawn up, no nuptial agreement is legally binding in the English court. Statute dictates that we have a discretionary system under which the court must consider all the circumstances of the case; the existence of a nuptial agreement is simply one of those circumstances that falls to be considered. The English family court will also only apply English law.
The weight given to a nuptial agreement can vary considerably. The leading case dealing with nuptial agreements was Radmacher v Granatino in 2010, which was decided by the Supreme Court. In that case the judges ruled 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 their agreement.”
For an international nuptial agreement to hold weight in the English court, it must meet the following requirements:
- The agreement must be entered into freely. That is, without undue influence, pressure, duress, fraud or misrepresentation.
- The parties must have a full appreciation of the implications of the agreement. This does not necessarily require detailed financial disclosure or independent legal advice for each party. However, disclosure and the opportunity to obtain advice would be evidential in showing that the party had access to all the information material to their decision to enter into the agreement.
- It must be fair to hold the parties to their agreement in the circumstances. It is often said that “fairness has a broad horizon” and what might be fair at the time of signing an agreement may not necessarily seem so fair at the time that agreement is called into effect. Certainly it should not result in one party being unable to meet their needs or being left in a “predicament of real need”.
Couples who have a nuptial agreement prepared abroad should strongly consider obtaining English legal advice to confirm how much weight it would be given if considered by the English court. If the nuptial agreement in question does not meet the above criteria, it is open to the court to disregard the agreement entirely, whether it was drawn up in England or abroad. Alternatively, the court can deviate from the terms agreed to the extent required to make the outcome ‘fair’.
How will English courts treat matrimonial property regime elections?
Many countries, including most in Europe, have what are known as matrimonial property regimes. Couples are required to elect a regime upon marriage, and the options typically include either:
- separation of property: each parties’ assets remain separate throughout the marriage and upon separation; or
- community of property: assets, other than inheritance and gifts acquired during the marriage, are owned jointly and, therefore, divided equally upon separation.
It is not uncommon for the couple to elect their preferred regime during their wedding ceremony or only shortly before. Typically, it will not have had the level of forethought, advice, disclosure or planning as a formal nuptial agreement. That said, the intention may well be the same in part: to make provision for how assets will be divided if the relationship breaks down. Such an election may be binding in the parties’ home country. Many couples therefore assume, wrongly, that this election will continue to be enforceable following a move to England. Many matrimonial property regime elections are unlikely to satisfy the Radmacher requirements. Such elections would attract little weight in England if there were to be divorce proceedings here.
Any parties with connections to England who wish their elected matrimonial property regime to have effect upon separation would be well advised to enter into a detailed post-nuptial agreement that comprehensively mirrors and records their intentions. As explained above, this nuptial agreement would still not be binding upon the English court, but prepared correctly could be given far greater weight than a simple matrimonial property regime.
How will a foreign jurisdiction deal with an English nuptial agreement?
Parties should understand that the treatment of any nuptial agreement will depend on the country that has jurisdiction to determine their divorce. Couples with foreign interests or connections should seek independent legal advice in all relevant jurisdictions. Depending on the country, different provisions may need be included in (or excluded from) a nuptial agreement and different formalities (perhaps for signing or registering) may have to be complied with. Couples contemplating a pre-nup should accordingly ensure that they allow enough time before their wedding to ascertain and satisfy all the relevant requirements.
Couples may need to enter into separate mirror agreements in several relevant jurisdictions to reflect the original English agreement. Alternatively, preferably, and more commonly an “omnibus” document will be prepared which endeavours to satisfy the requirements for all relevant countries. From an English perspective, any “omnibus” document would need to follow the requirements established in Radmacher to ensure that the parties have a sufficient understanding of the financial landscape within which their agreement is made and its legal consequences.
Parties should note that whilst an English judge may not enforce a nuptial agreement they do not consider fair, judges in other jurisdictions may not have the same flexibility or authority to deviate from the agreement. It would be dangerous to assume that any judge in any jurisdiction would necessarily “rescue” someone from an unfair agreement. Parties must therefore consider carefully whether the agreement they are signing is fair and would meet their needs, both in present circumstances and those they might anticipate in future.
Find out more about pre-nuptial and post-nuptial agreements
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