In his 2005 rap classic ‘Gold Digger’, Kanye West exhorts his audience to holla: ‘We want prenup!’ He explains: ‘It’s something that you need to have, because when she leaves… she’s going to leave with half.’ Perhaps a little gendered for modern times, but the legal advice is sound.
Kanye’s sage words spring to mind when reading the latest word on prenups from the High Court in the case of MN v AN. The wife accused the husband of calling her a ‘gold digger’ in what is described as ‘the mother of all arguments’ when they were negotiating their prenup in 2006. He denied this (although he conceded having said the wife’s approach would be a ‘gold-diggers’ charter’).
Seventeen years and two children later, the couple found themselves in the mother of all legal arguments: two years of litigation culminating in a four-day High Court trial, being cross-examined under intense scrutiny by King’s Counsel. The questions: was she forced to sign, and was the agreement fair?
Are prenups legally binding in the UK?
There is important context to bear in mind. Rewinding a little, the prenup was signed in 2005, four years before the seminal case of Radmacher v Granatino. In that case, the Supreme Court said that although prenuptial agreements are not binding in English law, they will be upheld if they are freely entered into, with a full appreciation of the implications and if they are fair in the circumstances prevailing at the time of a divorce, namely if they do not leave a party in ‘a predicament of real need’.
Since then a series of judgments have arguably diluted this dictum, casting doubt upon the protective power of the prenup. In the latest case, the fact that this prenup pre-dated Radmacher was of no consequence. The court applies the same test whenever a prenup was signed. The wife had received full disclosure of the husband’s assets and specialist legal advice. She claimed, however, that she was put under undue pressure by the husband to sign.
The judge disagreed. The husband said he would not have married without a prenup, but this was not undue pressure, and the ‘save the date’ invitation for the couple’s wedding was not sent until after the prenup was agreed. The judge found that the wife had instigated the argument and, after a cooling-off period outside, had returned to the home and negotiated a deal.
Was the agreement fair? The husband was worth £32.5 million before the marriage (his second). The prenup gave the wife £500,000 per year of marriage up to £12.5 million plus half the value of the family home after eight years of marriage or the birth of a child. Alternatively, she would receive 50 per cent of any increase in the husband’s net assets during the marriage.
Content from our partners
The provision was capped at 42 per cent of the husband’s overall wealth. There was a ‘sunset clause’ meaning the agreement would cease to operate after 25 years. It provided for child maintenance of £60,000 per year plus school fees and medical expenses, to be increased with inflation after 10 years.
[See also: What are the largest ever divorce settlements in the UK?]
Should certainty trump fairness?
This entitled the wife to £11.75 million out of total assets of £46.5 million. This was £4.75 million for a house plus a £7 million income fund which would produce around £300,000 per year for life, plus child maintenance of £146,000 per year. Pretty generous, one might think. The wife argued this was unfair because it did not meet her needs.
She said they had an exceptionally high standard of living during the marriage, spending over £1 million a year. She wanted £18.1 million. Again, the judge disagreed. He said she didn’t need £615,000 a year, including two live-in staff at £116,000 and £150,000 for solo holidays. The prenup was fair.
This is the latest word in an ongoing debate. Should two autonomous individuals be free to agree on what should happen in the event of a divorce, or should the state intervene if it considers that agreement to be unfair? Should certainty trump fairness? After a series of cases that have been seen to soften the decision in Radmacher, this latest judgment favours autonomy and certainty and may be seen as a boost to the power of prenup.
What lessons would Kanye draw? Prenups are powerful tools when it comes to asset protection. Without the agreement, the husband’s exposure would have been greater. Prenups should be a means of avoiding a dispute in the event of a divorce.
Admittedly that did not quite happen here and the parties spent considerable sums on legal fees, but you can bet your bottom dollar that the wife will be paying the husband’s legal costs for failing to convince the court she was forced into signing the agreement or that she should receive more than it entitled her to.
So, a prenup remains a wise insurance policy, and among the best means of wealth protection known to man – or indeed woman. As Kanye himself put it, ‘If you ain’t no punk holla, “We want prenup!”’
[See also: How to propose a prenup]
