Pre-Nups - Taking Control of the Game

Caroline Gordon-Smith Stevens & Bolton LLP Partner and Head of the Family and Matrimonial Department 3 July 2006

Pre-Nups - Taking Control of the Game

Have you noticed how many English Premiership footballers are engaged to be married but never quite get round to tying the knot? I suspect ...

Have you noticed how many English Premiership footballers are engaged to be married but never quite get round to tying the knot? I suspect this is because they have taken legal advice on the matter. Since Ray Parlour was ordered to pay £444,000 per annum to his former wife in addition to half his capital, many girlfriends have remained just that, rather than join the glamorous set of footballers’ wives. The stakes have risen further since the House of Lords gave judgment in May on the Miller and McFarlane cases. It is now undoubtedly the case that a wealthy individual will potentially have a greater amount to lose following a divorce in the UK than he/she would have in other jurisdictions around the world. So how can wealth be protected if wedding bells ring? Pre-Nuptial Agreements A pre-nuptial agreement is a contract entered into by both parties prior to the marriage and is designed to prescribe how assets will be owned during the marriage, how they will be divided on any marriage breakdown and how much (if any) maintenance should be paid. It can also dictate other matters such as the forum for any future divorce. At present, however, such agreements are not binding in the UK. It would not therefore be possible for a spouse to rely on such an agreement as the terms could be overturned by a UK Divorce Court. Nevertheless, pre-nuptial agreements are becoming more common in the UK and do have to be taken into account. There have been a few reported cases recently in which the agreements were largely upheld. These were short marriages where the terms of the “pre-nup” were felt to be extremely reasonable in all the circumstances. To stand the best chance of persuading a UK divorce Court to uphold a pre-nuptial agreement, parties should ensure that they provide full and frank disclosure of their financial circumstances, seek independent legal advice, enter into the agreement well in advance of the wedding day, consider the position regarding children and not put the other party under any undue pressure to sign. In spite of recent encouraging judicial observations there is no immediate prospect of the law changing in the UK with regard to pre-nuptial agreements. So there is still no legitimate way for marrying couples in this jurisdiction to protect their assets and obtain certainty over their future in the event that their marriage was to break down. The UK’s position on pre-nuptial agreements contrasts significantly with large parts of the rest of the world including the US and much of Europe where such agreements are valid and enforceable. Forum Shopping If the UK doesn’t provide the protection and certainty sought, should parties look abroad to marry and divorce? The answer is maybe - particularly if that country recognises pre-nuptial agreements whether prepared in that jurisdiction or elsewhere. It doesn’t actually matter, however, where the wedding takes place. Just because a marriage takes place in one country doesn’t necessarily mean that you have to divorce in that jurisdiction. It would be possible to divorce elsewhere provided the requirements for that particular jurisdiction are met. Such requirements vary between countries but often require parties to have lived in that country for a period of time prior to any divorce proceedings being issued there. Sometimes there may be two (or more) jurisdictions capable of issuing divorce proceedings and it would be vital to ensure that advice is taken to establish the most favorable. Within Europe if such competing jurisdictions are signatories to the Brussels II Convention then the first member state seized of proceedings will take precedence over any subsequent jurisdiction and will have to decline in favour of the first court and stay its own proceedings. This regulation will stand notwithstanding any term in a pre-nuptial agreement dictating the forum for a divorce. This can lead to a rather unfortunate race between parties to commence proceedings in their favoured jurisdiction and does not necessarily encourage attempts at reconciliation. Like football a marriage involves two halves. In the UK, such halves will be treated equally. Even, perhaps, where the marriage is very short. Some feel this can lead to injustice and is discouraging parties from getting married. Those footballers who are avoiding marriage and merely cohabiting shouldn’t rest on their laurels however. Rumour has it that the House of Lords is now looking to review the rights of cohabitees in the UK. Maybe the answer is to apply for a transfer?

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