There are plenty of legal pitfalls to avoid if you want to stand the best chance of ensuring that your prenuptial agreement is taken into account by a court and that it is legally enforceable.
If these pitfalls are ignored a UK court may well choose to disregard the provisions of your pre-nuptial agreement.
A few of the most important pitfalls are set out below.
[NB: there is no substitute for discussing the requirements of your specific circumstances and your personal objectives with a solicitor as early as possible in order to ensure that you avoid these pitfalls and ensure that your prenuptial agreement is compliant with UK law and properly reflects your wishes and your expectations in the event of your future divorce.]
Independent legal advice
A UK prenuptial agreement will probably not be enforceable if it can be shown that one of the parties to the marriage did not get proper independent legal advice before entering into the prenuptial agreement itself. This will certainly be the position if the person who did not get independent legal advice has been prejudiced, or will be prejudiced, by the existence of the prenuptial agreement when it comes to deciding the split of assets on divorce. As a rule of thumb, if they are to enforce a prenuptial agreement UK courts will insist that each party to the marriage should have been separately represented by an independent solicitor with experience of advising on, and drawing up, prenuptial agreements. If either of the parties is not represented, or is badly represented, then the prenuptial agreement will not be worth the paper it is written on and is unlikely to be enforced.
A UK prenuptial agreement can be challenged if either of the parties did not make full and proper disclosure of their financial assets at the time that the prenuptial agreement was entered into. This means that the assets should be identified, disclosed and, where appropriate, scheduled to the agreement itself. If full disclosure is not undertaken by each of the parties to the marriage prior to entering into the pre-nuptial agreement UK courts will probably not be disposed to enforcing its provisions. The principle of full disclosure is likely to remain important even though in the recent UK case of Crossley –v- Crossley the court decided that detailed disclosure may not always be necessary in certain cases where the marriage is of short duration and both parties to the marriage were considerably wealthy at the time of the marriage.
A prenuptial agreement should not be rushed into. Ideally, it should be discussed, drawn up and implemented by your solicitor at the least a month or so prior to the date of your marriage. If it is entered into in haste immediately prior to the marriage this is likely to lead to allegations of duress and will mean that the prenuptial agreement may be challenged later. Do you need to delay the date of your wedding? Possibly, yes, if the prenuptial agreement issues are of sufficient importance to you, but in any event get onto this as soon as possible. The actual process or drawing up a valid pre-nuptial agreement can take a week or so….possibly longer in more complex cases.
A prenuptial agreement will need to deal with any property or financial assets that you may have in any other country of the world apart from the UK. If you do get divorced, UK courts will look at all of your assets on a worldwide basis. Sometimes there is a conflict between the legal position in the other countries where your assets are situated and how your assets will be treated by a UK court. It is often necessary, as part of the process of drawing up a prenuptial agreement in the UK, to take legal advice in those countries where you have significant property assets in order to ensure that all relevant legal issues are dealt with appropriately.
If either party is pushed or bullied into entering into a prenuptial agreement UK courts will probably not allow the agreement to be enforced. So if there is any possibility that either party has been put under any duress or threat, then you will not be able to rely on your prenuptial agreement. Future allegations off duress can be minimized by ensuring that each party gets proper legal advice and the prenuptial agreement itself is properly drawn up.
Existing children and dependants
If either of the parties to the marriage has children from a previous marriage or, possibly, other dependants, the prenuptial agreement will need to acknowledge this and its terms should accommodate the interests of those children or dependants in any future financial settlement. If the prenuptial agreement does not address these issues it is likely, in whole or in part, to be overlooked by a UK court.
A valid UK prenuptial agreement should contain provisions that accommodate the likely future interests of the parties and any children to the marriage; it should also address the question of whether its provisions should lapse or at least be reviewed or modified once the marriage has endured a reasonable number of years. In other words, the prenuptial agreement should allow for some future flexibility. If not, a UK court is likely simply to proceed on the basis of the Section 25 considerations without regard to the provisions of the prenuptial agreement, particularly if enforcing the provisions of an inflexible or incomplete prenuptial agreement would lead to an unjust result in the eyes of the UK court.
Obviously, both parties need to be able to read and understand the provisions of the pre-nuptial agreement and, if it is written in a language other than the first language of one of the parties, it may be necessary to get a translation done or at least to ensure that independent advice is given with sufficient clarity for the prenuptial agreement not be challenged on the basis that one of the parties did not understand its terms.
A prenuptial agreement should contain choice of law and forum clauses that specify which law will apply to the prenuptial agreement and where any issues relating to its enforceability should be adjudicated.
Each party to a prenuptial agreement should be advised, and given an opportunity, to take tax advice not only in the United Kingdom but also in any other relevant country in relation to the tax effects of the provisions of the prenuptial agreement. Failure to do this can result in severe adverse tax consequences for either or both of the parties.
What happens if one of the parties to the prenuptial agreement dies during the marriage? This should be considered and each party should ensure that their Wills (not only in the UK but in any other jurisdiction) are consistent with the wishes and intentions expressed under the prenuptial agreement and will not conflict with it in the event of the death of one of the parties. Marriage, of course, will revoke a Will under UK law and accordingly this is an issue which should be considered after the marriage has taken place and, as a matter of good practice, all married people should ensure that they have a valid Will and that it does not conflict with the any pre-existing prenuptial agreement.
As you can see from the above discussion there are a lot of issues involved and you would be be well-advised to take legal advice as soon as possible if you are contemplating marriage and wish to enter into a prenuptial agreement, or, if you have already entered into a prenuptial agreement and want to know whether it will be valid and binding on divorce.
Please do not hesitate to contact us