Pre-nup

An examination of the recent news in Family Law of the Radmacher case and a Pre-nup , the Law Commission consultation and what it could possibly mean for today’s couples.

Pre-nup

Lloyd Barrett

In November last year the Law Gazette reported on the Supreme Court’s decision in Radmacher v Granatino; after the collapse of her marriage it was ruled that German heiress Katrin Radmacher should keep the bulk of her £100 million after the ex-husband sought to claim a greater share. A majority decision was reached on the operability of pre-nuptial agreements.

To quote:  “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 in their agreement”

In English, it means that when there is a pre-nuptial agreement in place, the courts will give it serious consideration unless it’s extremely unfair. This doesn’t sound like earth-shattering new until you realise that the driving concept of divorce law is that the divorcing couples should get a fair division of the ‘matrimonial property’.

English Family Law is currently being taught as one of the fairest laws in the Western World. Celebrities flock from overseas to get married (and divorced) because of the fairness of this system. In (very) short: when trying to decide who gets what out of the divorce the Courts take into account not only who the breadwinner is, but rather the contributions of the parties to the marriage: the effort involved in the housewife’s (or househusband’s) raising of children and generally making the house a home isn’t necessarily quantifiable but is as valued as much as bringing home the bacon.The idea was that, after the divorce, the parties achieved a clean break and are able to live the rest of their lives as comfortably as possible; whereas women usually got the raw deal before this.

Recently though, the Law Commission has discovered that sometimes even this concept of fairness isn’t all that fair. If a couple marry and one of them was to inherit a sizeable estate, family business, had property from a previous settlement (or was a Beatle and had millions from royalties, ahem) it could be said that it would be perceived as ‘matrimonial property’ and it would be split as fairly as possible for the reasons above: the business/property could be liquidated and the money would go to the ex: a fair outcome for him/her, a lost family legacy for you.

Addressing this inequality, the government in 1998 produced a green paper which set out recommendations regarding pre-nuptial agreements: the courts still upheld the overriding notion of fairness, looking at each case objectively and trying to achieve a fair and balanced outcome for all parties involved, but the court’s attitude to pre-nuptial agreements had started to change. Thirteen years and a spate of pre-nup cases later, Radmacher is being seen as a harbinger of Family Law reform.

The Law Commission has recently been producing a consultation paper examining whether pre-nuptial agreements should be placed on a statutory footing. It goes on to consider to what limit agreements could operate (the best example is that of children: an agreement cannot prejudice their reasonable needs) and even what could be considered ‘non-matrimonial property’. Concerns about what may happen when there is a change of circumstances after the marriage may in future be dealt with a ‘sunset clause’, where the pre-nup would automatically terminate after an agreed number of years, or at a specific event such as the birth of a child.

While it is currently accepted as ‘rich-man’s law’ Professor Elizabeth Cooke, the commissioner leading the consultation, recognises the need for less wealthy couples to be protected also, and this consultation shall be led with their needs borne in mind.The consultation paper will be published in 2012.

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