The answer is, yes. If you do not seek legal advice, there is a chance that the prenuptial agreement (or prenup) will not be valid.
In the UK, pre-nuptial agreements are not yet legally binding or completely enforceable. However, since 2010 (following the widely-reported case of Radmacher v Granatino, where the prenup was upheld), the family courts have attributed more significance to the existence of a prenup when considering how the assets of divorcing parties’ should be divided between them. The decision of how much weight a prenup is given, if any, is determined by the court, taking its existence into account as one relevant factor of the case.
Over the last decade, people have become increasingly commercially ambitious and there has been a more prominent focus on wealth management. Thus, more couples seek to protect their assets with the help of a prenup. The Law Commission recognised these changes and issued the following, helpful guidance on how to give prenups the best chance of being upheld upon divorce:
- The agreement must be entered into by both parties freely and of their own will (and not under duress or under any sort of misrepresentation);
- Both parties must have received, full disclosure about the other party’s financial situation before signing the document;
- The agreement must be a formal Deed and must contain a Statement of Truth, signed by both parties recognising that the agreement is a qualifying nuptial agreement and stating that the disclosure given is honest and full disclosure;
- The agreement must be entered into more than 28 days before the date of the wedding or civil partnership;
- Both parties must have received legal advice or been given the opportunity to have received legal advice on the terms and consequences of the terms of the agreement;
- The agreement cannot seek to provide an unfair or unreasonable outcome which would not meet the basic needs of the spouses or of any of the children of the marriage.
If the guidance above is followed, it is likely that your prenup will be valid (known as a Qualifying Nuptial Agreement or QNA) and then it will be for the family courts to decide how much of the agreement should be implemented upon divorce. The most important objective in upholding a prenuptial agreement is to ensure that the parties’ ‘needs’ are met and that the outcome is not an unfair or unreasonable one.
The recent case of Versteegh v Versteegh
The issue of prenuptial agreements was thrown up in a recent case concerning Gerard Versteegh (a Swedish property tycoon) and his wife, Camilla (a homemaker) married 25 years ago, in 1993. They had 3 children and lived in a £60 million property in Kensington, West London.
The day before the wedding, on 27th August 1993, Gerard asked Camilla to sign a prenuptial agreement curtailing her rights to his wealth. Camilla signed the document without any legal advice or without having the opportunity to seek legal advice, should she have wished to do so.
25 years later, the parties are divorcing and the question is, was the prenuptial agreement valid? Mr Versteegh says Mrs Versteegh knew what she was signing. Mrs Versteegh says she did not understand the full implications of the agreement and thought that the agreement protected only her husband’s inherited wealth (rather than any assets they built up together during the marriage).
The Judge – Sir Peter Singer – awarded the wife just £90m in cash and assets (representing just 38% of the family’s assets), with the terms of the prenup in mind. At the time, the Husband was worth £237m. The Judge was open in saying that he would have awarded Mrs Versteegh far more than £90m, but for the prenuptial agreement (together with the effect of “Brexit uncertainties” on the husband’s property empire).
This is an interesting case as it can be viewed from two diverging perspectives:
– On the one hand, the Judge upheld the prenuptial agreement despite the fact that the Law Commission’s guidance had not been adhered to in full and the Wife did not receive independent legal advice;
– On the other hand, assuming she knew what she was signing, the award of £90m still met the Wife’s needs, for the rest of her life and was not, therefore, an unfair outcome, even though she didn’t get legal advice. (The same could not be said if the award was for, say, £90,000).
We will wait to see how much weight will be given to the Law Commission’s guidance above in the more ‘regular’ case where the assets are not as high in value.
Making you prenuptial agreement secure
This case throws up the following interesting questions:
– How strictly do the family courts apply the Law Commissions guidance when considering pre-nuptial agreements?
– Is Mrs Versteegh trying to backtrack on the terms of the prenup given the success of the family or did she not understand what she was signing?
– If she didn’t understand the document, is her award a fair one?
– Was the agreement valid in the first place?
– What if, Mrs Versteegh had been given enough of an opportunity to take legal advice, but had chosen not to, would the agreement still have been upheld notwithstanding that the outcome may have been the same?
Mrs Versteegh, represented by Mr Tim Bishop QC, is now asking the Court of Appeal to grant her a further £25m and the parties will be engaged in costly and lengthy proceedings regarding the Wife’s understanding of the document.
In order to give your prenuptial agreement the best chance of being deemed valid, the Law Commission’s guidance should always be observed giving both parties the certainty they must have strived for in agreeing to enter into a prenup in the first place.
Thinking about prenuptial agreements? Get in touch with our expert family lawyer team and we’ll talk you through it. Call 020 7436 6767 and arrange a FREE consultation