My ears pricked as I sat having a coffee on a Sunday on my local high street. Beside me was a group of young couples slurping their coffees and generally having a good old catch up.
I neither knew these people, nor their friend, and I certainly did not want to intervene. However, in my experience talking about marital agreements in a ‘non-work’ context sparks divisive reaction.
Debate will surely ensue and often someone will say: ‘but pre-nups don’t really work, do they?’ The group will then look towards me with tilted heads inviting some clarification (which I tend to sidestep, not wanting to detract from what is supposed to be a social occasion).
No politics at the dinner table is a common refrain, perhaps we should add no ‘pre-nups’ to the list of topics banned at the table too: merely raising the theory of the topic in a social setting makes young couples visibly hot under the collar.
Practitioners are well versed in the delicate dance that our clients will ask us to choreograph as they raise the possibility of a nuptial agreement with their partner; this is before the probative job of gathering financial disclosure, negotiating with the other side, drafting, re-drafting, drafting some more, and coming to a final agreement.
Before tabling some of my thoughts, it serves to first tackle the question: ‘what is a pre-nup?’ There is some mystique surrounding nuptial agreements, and answering this question illuminates at least one potential reason for the persistence of the misconception that these agreements ‘don’t work’.
First, nuptial agreements come in all shapes and sizes and can serve various purposes.
The most spoken about nuptial agreement is a pre-nuptial agreement (also known as an ante-nuptial agreement). A pre-nuptial agreement, or ‘pre-nup’, is so called because the parties reach the agreement before the marriage.
Arguably more common in practice is a post-nuptial agreement, or ‘post-nup’. This agreement is called a post-nuptial agreement because the parties reach the agreement after the marriage takes place.
A couple can enter into a post-nuptial agreement at any point in their marriage, it does not have to be immediately after the marriage takes place. Nuptial agreements often, and in my opinion should, include a review clause, which means that the agreement is updated every 5 years (or whenever a child is born) to ensure that its terms continue to reflect the couple’s financial circumstance and the state of the marriage generally.
Indeed, some couples may enter into a post-nuptial agreement when they are considering divorce, or even when one party has issued a divorce application. A post-nuptial agreement at this point allows both individuals some clarity and certainty while they attempt to make their marriage work.
Immediately, this short summary highlights that nuptial agreements are useful in a variety of circumstances and can be used at various points within the lifecycle of a relationship.
The short answer is no. Broadly, a nuptial agreement has two, interlinked functions:
With that in mind, if one party is financially stronger there is obvious merit in defining precisely ‘what’ they brought into the marriage. However, it is not necessary that there are substantial assets for a nuptial agreement to be effective or worthwhile.
This list is not exhaustive, but I hope demonstrates that nuptial agreements neither not the preserve of the rich and famous, nor are they one size-fits-all; their value is in their flexibility. No two couples arrange their finances in the same way, an agreement gives the scope to reflect this fact and design an outcome that reflect their unique circumstances.
The point is this: people spend much time, effort, and money to enter into nuptial agreements. Why, then, does the misconception that those agreements might be worthless persist?
To my mind, there are several reasons: some social, some quasi-legal, others just wrong.
A marriage is, at its most basic, a public ceremony that celebrates and memorialises love and commitment. Broaching the topic of a document, the function of which is predicated on the breakdown of a relationship, perhaps at the precise time that couples are planning their wedding, is potentially thorny and uncomfortable. Indeed, to some it can seem perverse.
Nuptial agreements are, by their nature, teleological. They envisage and provide for the breakdown of a marriage, the end point. Many no doubt conceive the prospect of those agreements as a sort of Damoclean sword hanging over what is a happy and loving relationship.
This, however, does not speak to the worth of the agreement itself. It is a matter of perception. I don’t take out flood insurance because I think my house will flood. I sincerely hope it doesn’t and I think it never will. However, if the river Chelmer does ever burst its banks, my taking insurance has mitigated some risk and provided me with some certainty of outcome.
Despite this, I suspect that even if some individuals may see the good sense in a nuptial agreement (in private), their teleological nature and the prospect of uncomfortable conversations that may follow fuels the misconception that nuptial agreements are worthless. In other words, it is easier to believe that a nuptial agreement is worthless than it is to have the difficult conversations that planning and agreeing a nuptial agreement will bring.
I enjoy a legal drama. I am currently over-invested in watching ‘The Split’. However, every legal professional will tell you that those dramas do not capture the lived reality of practice and are prone to over-dramatization. In and of itself, that is fine. The issue is that when real-world legal issues are given a glossy-Hollywood sheen, their presentation seeps into popular consciousness.
If Harvey Specter can promise his client that he can get that agreement ripped up or tossed out, the same must be true of nuptial agreements, no? Of course, viewers realise that the world captured in legal dramas is not ‘real’, but you can excuse them for thinking that some of the particularities are based on some truth. This is a fundamental misstep, which has tacitly supported the misconception in popular culture that marital agreements can be easily set aside.
It is true that, at present, marital agreements do not have contractual status. This may all change pending Baroness Deech’s Divorce (Financial Provisions) Bill. But while we wait, it is certainly true that the court’s of England and Wales have shown increasing willingness to hold parties to nuptial agreements, when these agreements are freely and fairly entered into, the parties appreciate the implications of the agreement, and the agreement is fair. Indeed, we might see the provisions on nuptial agreements within The Divorce (Financial Provisions) Bill as a reflection of this growing willingness.
There are a few important things to note here:
A nuptial agreement is one factor to which the court shall have regard when deciding how to divide parties’ assets following divorce. The ‘magnetism’ of that factor will depend on two things:
So, while it is right to say that nuptial agreements do not have contractual force, it would be wrong to conclude that a nuptial agreement is worthless or that it can be easily set aside. At the very least the court will expressly consider the agreement as part of its wider discretionary exercise of deciding what is ‘fair’. Moreover, if the agreement was properly entered into, properly drafted, and makes fair provision it is likely that the court will make an order distributing assets along the terms of the agreement.
Like all things, beauty is in the eye of the beholder. I see two, clear reasons why nuptial agreements are valuable.
The first, more obvious, reason is that a good nuptial agreement gives some certainty of outcome. It is commonly said that court can be a blunt instrument. While you can make submissions on what you think the outcome should be, the decision is, ultimately, in the hands of the tribunal.
In contrast, a nuptial agreement is bespoke, allowing individuals to take a more focused approach. It offers the potential for parties to define and protect certain assets, as long as the agreement still makes fair provision. In short, an effective nuptial agreement can mitigate risk, representing some control in an uncertain process at a tumultuous time. I return to my insurance analogy. You hope that you will never need it, but if you ever do have cause to use it you have some idea of what the outcome may look like.
The second, ancillary, benefit is that control and certainty can assuage potential animosity and acrimony. Coming to an agreement is a collaborative process. Unfortunately, despite the drive to divorce ‘well’, Financial Remedy Proceedings take place within an adversarial system. The benefit of an agreement is that the certainty of outcome it may bring can allow parties to simplify the court process or even avoid the need for court intervention altogether. Not only can a nuptial agreement make the divorce process smoother, it can also make it more cost effective.
In my opinion, especially if there are children of the family, the prospect of divorcing amicably makes nuptial agreements worth their weight in gold.