In recent years, there has been more and more emphasis on the pre-nuptial agreement and even a cursory search of legal thought on this topic may only add to what is a confusing picture for anyone considering whether or not to enter into such an agreement prior to their marriage.
If you are considering entering into a pre-nup, then it is essential to be aware all the dangers that lurk in this increasingly complex area of family law. These dangers have been only very recently spelt out by the English Court of Appeal in the case of Entwistle and the case last year of ND and KD. The decisions in these cases will almost certainly be followed by any similar decisions by the Royal Court in Jersey.
ND and KD Case (2024)
The decision in ND and KD in 2024 alerts us all to the care that must be taken when drafting any pre-nup. In this case, a pre-nup was entered into shortly before the marriage and when the marriage broke down ten years later, the agreement was the subject of bitterly fought court proceedings. It is relevant that during the marriage a child had been born and that the pre-nup in question gave very little financial provision to the wife in the event of divorce.
Such pre-nups are not unusual in Jersey whereupon marriage there is a financially stronger party and one who is much weaker financially. Such arrangements are sometimes referred to as “extreme pre-nups”. For many years now, it has been the case that the courts will not withhold in their entirety pre-nups that fail to provide for the reasonable needs of the weaker party, as they must be given some road to independent living. This is particularly the case where there is a minor child or children of the marriage.
The lessons to be learnt from ND and KD are:
- Beware of just trying to protect wealth regardless of the other spouse and the reasonable needs (particularly for housing) that she or he may have in the future.
- Make sure that reviews of the agreement are built in, either on, say, a five-yearly basis or on the happening of an event such as the birth of a child. If such reviews are provided for, make sure that a proper review is carried out and any changes made to the agreement.
- It is essential that no undue pressure is placed on the financially weaker party at the time of entering into the pre-nup and that sufficient time is allowed for that party to take legal advice of their own.
- If legal advice is taken, and there is clear advice that the agreement is unfair, it is very dangerous to ignore that advice.
The court held in ND and KD that the wife was pressured into signing the agreement, and her lawyer had misgivings about her signing the agreement as the terms were unfair to the wife. The agreement did actually allow for a review on the birth of a child, but this was not acted upon.
Entwistle Case
In the Entwistle case, the Court of Appeal this summer allowed an appeal by the husband as it found that the wife had failed to disclose more than 70% of her wealth in an agreement that was signed on the parties’ wedding day in which they were to keep all their wealth before marriage and divided equally jointly owned property.
In this case, there were no children and it was only a three-year marriage. The wife had failed to disclose around £47.8m and the Court of Appeal rejected the argument by the wife that she was unaware of the true value of her assets. What made matters even worse was that the agreement agreed to waive his right to take legal advice on the agreement.
The lessons from Entwistle are very clear:
- It is always dangerous to sign a pre-nup too close to the wedding and no party should be asked to waive their right to take independent legal advice of their own.
- Full financial disclosure must be made and proper steps taken by the financially stronger party to ascertain their own wealth. This includes any wealth held in a trust or where assets are held with another family member.
- Beware of relying on an agreement which is extreme or obviously unfair to the financially weaker party.
The Overriding Principle
Neither of these recent cases sets aside the legal concept from the Radmacher case several years ago where the English Supreme Court held that agreements should be given decisive weight in a divorce where the parties had freely entered into that agreement with a full understanding of the implications of it. However, the overriding principal even in Radmacher was that the court can look beyond the agreement where it would be unfair not to do so.
The myth of the pre-nup is that it will offer full protection in the case of divorce proceedings in any circumstance when the actual reality is that all the lessons outlined in recent court cases must be adhered to.
The golden rule is to ensure that before signing any pre-nup, full and competent legal advice is taken from a lawyer specialising in family law. At Cohen Family Law, we are experienced in advising on pre-nups and can provide clear expert guidance tailored to your circumstances. Please get in touch to discuss further.
