Pre-nups set to come of age with Radmacher
Family
Legal bulletin | 10 June 2010
Read judgment, 20 October 2010
Marital agreements or pre-nuptial agreements have never been binding in this country, however as the Supreme Court prepares to give its judgment in the case of Katrin Radmacher v Nicolas Granatino, there is a very real possibility that they will soon carry far greater importance.
Pre-nuptial agreements can provide for a fair division of property assets before a marriage is entered into (or even after the marriage – post-nuptial agreements) and can also avoid contested divorce proceedings. Due to procedural changes last year, divorce proceedings now take place in the presence of the press and a marital contract can include important provision to protect the privacy of the parties, their family and their businesses.
The Radmacher decision is due imminently and will clarify the status and strength of marital agreements, often referred to as pre-nuptial agreements. Currently, pre-nups are persuasive. It is likely that they will become much more determinative.
THE FACTS of Radmacher v Granatino [2009] EWCA Civ 649
The couple married in 1998 and divorced in 2006.
Prior to their marriage, the couple signed a pre-nuptial agreement which barred Mr Granatino from making any financial claims against his wife in the event that their marriage broke down. Ms Radmacher has an estimated fortune of £100million (mostly emanating from inherited wealth).
Under the terms of the pre-nuptial agreement, Mr Granatino was to receive nothing. During the course of divorce and ancillary relief proceedings, Mr Granatino claimed £9.2 million.
The Family Division of the High Court awarded Mr Granatino £5.6m. His wife appealed.
The Court of Appeal greatly reduced Mr Granatino’s financial award. It ruled that due weight should be given to pre-nuptial agreements freely entered into, and that English divorce law was out of step with the rest of Europe in this regard.
In March of this year, the case climbed further up the judicial ladder to the Supreme Court, which is due to hand down judgment imminently.
How does the case affect you/your clients?
Marital agreements – both pre- and post-nuptials – are crucial, even now, prior to any ruling in this case. They set out in writing the parties’ intentions in relation to money and can prevent future litigation.
Without them, the default position can be a 50:50 split of assets, despite what the parties think is fair.
At the very least, as of today, marital agreements are persuasive. They put the parties in a stronger starting position than they would be without them. Before long they are likely to hold even more weight.
Not only do marital agreements relate to assets accrued during a marriage, they can distinguish assets accrued prior to the marriage. This could be crucial, in particular, in relation to inherited wealth before the marriage even took place
The agreements can also include protections in relation to privacy. For example, the parties can agree not to air confidential information in public – either in relation to business or family matters. This is particularly important now that the press can attend family court hearings.
