It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife – or so it was back in 1813, when Jane Austen penned that famous line. If she were writing today, perhaps it would be altered in more ways than one. Because, apart from the fact that women are increasingly likely to have fortunes of their own, any unmarried person with considerable assets in want of a spouse is also likely to be in want of a prenup.
Once considered to be reserved for Hollywood A-listers and billionaires, prenuptial agreements have now become commonplace. Some 20 per cent of all marriages in the UK are subject to a prenup, according to the charity Marriage Foundation. That’s up from 8 per cent in the Nineties. Among couples including one or more HNWs, the proportion is thought to be significantly higher. Leading London law firm Stewarts reported that enquiries relating to prenups increased by 51.2 per cent in 2022.
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What’s more, some wealthy parents are instituting charters and introducing incentives designed to encourage their children to enter into prenups before getting married. Barrister James Roberts KC of 1 King’s Bench Walk told the Times recently: ‘Parents cannot force what is after all an adult child to enter into a prenup – but they can of course choose not to make a gift or an advancement of inheritance without one.’
Although divorce rates in this country have fallen in recent years – the rate in 2022 of 6.6 per 1,000 of the married population was the lowest since 1971 – the number of divorces remains significant and prenups, which were once almost taboo, have become increasingly prevalent in conversation, culture and current affairs. Recent revelations of the details of the prenup between Britney Spears and her ex-husband Sam Asghari are just one example of many similar stories splashed across social media and the newspapers.
However, prenups are still not always widely understood by those who are about to enter into them. And the way in which the law is enforced regularly calls into question how effective or final their terms will be.
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Evolution of prenups
Prior to 2010, prenups were far from legally binding. In the event of a divorce, a court might have taken the agreement into account when weighing the division of assets, but the extent to which it was considered was left to the discretion of the judge. However, the tide turned with the Supreme Court case of Radmacher v Granatino. The landmark case ended in victory for Spear’s Top Flight family lawyer Ayesha Vardag, who was acting for German heiress Katrin Radmacher, the wealthier party in her divorce from Frenchman Nicolas Granatino. The judgment affirmed that a court ‘should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications’.
This marked a significant shift in UK legislation, which had, pre-2010, been ambiguous in relation to prenups. ‘Until Radmacher v Granatino, we’d never had something definitive said to us by the highest court in the land,’ Emily Kapoor, divorce lawyer at Katz Partners, tells Spear’s. ‘Definitive’, however, does not equate to legally binding, she warns.
All is fair in love and war
While courts are more likely to consider prenuptial agreements in their judgments, there are certain criteria the agreements need to fulfil in order to be given full weight. Both parties must have sound and sensible legal advice prior to entering into the contract; the wealthier party must provide full financial disclosure of their assets; and the agreement must have fair outcomes for the financially weaker party. If these criteria are met, a prenup will be granted substantial weight in the eyes of a judge.
If, however, an argument can be made that the prenup was entered into in an unfair manner or leaves one party in an unfit financial position – for example, without basic needs such as housing – it might not be enforced. ‘Radmacher v Granatino never went so far as to say that there would now be a presumption that prenuptial agreements will be upheld, but in effect shifted the onus to be on the party having to explain to the court why they shouldn’t be held to that agreement,’ says Harbottle & Lewis partner Nicholas Westley.
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The argument that a prenup doesn’t fully meet one’s financial needs would be dependent on several factors. ‘If you had a short, childless marriage where no wealth was generated, it might be reasonable that the financially weaker party is left with only their basic-level needs met,’ explains Westley. ‘If you’d been married for 25 years, four children had been produced, and a huge amount of money generated throughout the marriage, the court would be reluctant to leave someone in a position where only their basic needs were being met.’ He cautions clients that, for this reason, it’s better to update prenups regularly and err on the side of generosity.
For HNWs entering into a prenup, it’s important to consider how the contract appears to a judge and keep ‘fairness’ front of mind. The mark of a good prenup is one that is entered into with eyes wide open by all involved, so, as Kapoor says, ‘You can go to sleep at night knowing what you’re in for, and there’s value for both parties in that.’
This feature was first published in Spear’s Magazine Issue 92. Click here to subscribe
