With prenups slowly spilling out from Britain’s celebrity sphere into the public domain, there are caveats financially weaker spouses must not be blind to, writes Tanya Dhillon
England has often been called the divorce capital of the world with people trying to squeeze themselves through the jurisdictional rules to enable them to argue for a ‘fair’ share of the assets and income before our judges. The reality is that England remains rather paternalistic in its approach to these matters and the case law on what constitutes fairness is vast.
Over the last 20 years in particular, case law has given greater prominence to non-financial contributions of the home maker and primary carer of the children (still much more likely to be women). It has extended the principle of maintenance responsibilities continuing after the marriage. It has acknowledged the financial detriment arising from a mother’s career break and recognised her share in the proceeds of the breadwinner’s gains – income for the family not just the earner himself. The law has been reluctant to distinguish property and assets belonging to one party or another within a marriage and the family court has far-reaching powers to transfer property ownership from one party to another upon divorce to ensure an outcome which is ‘fair having regard to all the circumstances.’ These circumstances may include children’s needs, a mother’s diminished ability to earn, age differences, health issues and many other unforeseen outcomes not anticipated at the time the parties married.
There has been movement in more recent years to encourage greater financial autonomy post-divorce but this is a slow process and really engages more in bringing spousal maintenance to an end at an earlier stage rather than an overhaul of the current system and outcomes remain uncertain. This litigation lottery has led to calls for couples to have more of a choice in regulating how their financial matters should be divided in the event the marriage breaks down. In the past, the words pre-nuptial agreement were more likely to conjure up a scene from an American film than prompt people in England to seriously consider what might happen if their own marriage – existing or anticipated – were to break down but with the increase in international lifestyles and more exposure to cultures where pre-nuptial agreements are the norm, the focus upon them has grown.
Pre-nuptial agreements – a contract signed before marriage setting out what should happen to property and assets in the event of marriage breakdown – have a much longer history in the US and most of Europe than in England. In those countries marriage itself is viewed more like a contract. The parties are empowered to further contract over how assets and property will be treated in divorce, long before the blame game and bitterness of an emotional separation appears on the horizon. They are an entirely standard part of the marriage preparations. The benefits to the parties being choice, certainty and an avoidance of legal fees.
Inevitably, it is the person with the greater wealth that will be seeking to minimise the claims against it in the event of a breakdown of the relationship. This is often viewed as a rather unromantic notion and it is suggested that this is a hard topic to raise when on bended knee with a marriage proposal. A pre-nup seeks to trump the judges’ discretion, as described above, with a pre-existing contract between the parties. It seeks, in effect, to allow the parties to contract out of much of the body of existing English case law. Given that the law has moved in favour of the financially weaker spouse it is hard to frame a more rigorous pre-nup regime as liberating or empowering other than to the already wealthier party. It is hard to imagine how women, still largely the primary carers and financially weaker parties, would have much to gain.
It remains that pre-nuptial agreements are not automatically binding but since the 2010 case of Radmacher v Granatino the traction in the courts for approving arrangements set out by the parties before the marriage is gaining favour, with appropriate guidelines of course. The provisions in the pre-nup must be ‘fair’ in all the circumstances and therefore make adequate provision for unborn children and unforeseen events.
A key consideration in all of this is what is ‘fair’. Like beauty, this is in the eye of the beholder but a good solicitor can provide you with guidance on what provisions should and should not be included in an agreement of this type. I leave you with one item of food for thought which might help when defending the romance of a pre-nuptial agreement. It is only in very limited cases that the person giving up their career for children (which remains to be usually the female counterpart and also is usually the weaker economic party as a result) is fully compensated for their loss of career. Judges commonly award spousal maintenance to help bridge the gap between their income and their needs but it does not go so far as compensating their loss. There is, however, no reason why this could not be catered for in a bespoke pre-nuptial agreement. There is no need for a pre-nuptial agreement to replace the goal of being fair with the goal of being mean.
Tanya Dhillon specialises in family law matters and is a senior associate at Pitmans Law LLP