How Much Weight Should be Given to Pre- and Post-Nuptial Agreements?

9th December 2022 By

In many big money divorce cases, disputes concerning the validity and enforceability of pre- and post-nuptial agreements take centre stage. However, as a Family Court ruling showed, such agreements do not displace the judicial obligation to achieve a fair division of assets that meets the reasonable needs of both spouses.

The case concerned a middle-aged couple who, throughout their 15-year marriage, based their affluent lifestyle on the largesse of the husband’s immensely wealthy father. By the time of their separation, the husband had only a modest earned income and the wife had no meaningful earning capacity. Their assets, almost all of them derived from the father, were worth about £12.47 million.

In determining how those assets should be divided, the Court rejected arguments that the wife had been placed under undue pressure to sign a pre-nuptial agreement which, amongst other things, expressly stated that she would have no claim against the husband’s dynastic wealth. However, it gave limited weight to the agreement on the basis that its provisions had been largely overtaken by events.

The wife had also not been placed under undue pressure to enter into a post-nuptial agreement shortly before the end of the marriage. That agreement, which purported to limit her claim to about £7.1 million, was not strictly binding on her in that she had not signed it. However, the Court found that an accord had undoubtedly been reached and that the document should not be entirely ignored.

The husband received substantial financial gifts from his father during the marriage but, due to a serious breakdown in their relationship, the latter’s munificence had ceased. The Court found that the gifts were unlikely to resume in the foreseeable future. The wife, however, asserted that the husband’s inheritance prospects exceeded £100 million.

Despite the bad blood between them, the Court doubted that the father would wish to render the husband destitute. In the absence of a complete family meltdown, the husband was likely to receive a significant inheritance in due course. Such an inheritance would, however, be entirely non-matrimonial and would be received long after the couple’s separation. Both pre- and post-nuptial agreements clearly stated that the wife would have no claim against the husband’s inheritance.

Although the agreements were the subject of much of the argument in the case, the Court noted that its primary focus was on the wife’s reasonable needs. It found that such needs would be met by her exiting the marriage with assets worth a total of £7.45 million, or roughly 60 per cent of the available assets. The husband would, in addition, have a very high level of financial commitment to the couple’s school-age children.

Source: Concious

Latest News

Award That Requires Borrowing Made Into Court Order

17th May, 2024 By

Disagreements between separating couples all too often result in litigation that substantially reduces the assets available to them, as was illustrated by a case that recently reached the High Court. At issue was whether awards made by arbitrators in financial remedy proceedings can be made into court orders even if that would require one of the parties to borrow money. The couple had previously had a relationship lasting a few years before resuming their relationship in 2015. They had two children before separating again in 2019. Following their separation, the...

Inheritance Disputes – Costs Risks Can Be Reduced

15th May, 2024 By

Arguments about what someone promised before their death can lead to significant legal costs. However, if faced with a claim against the estate, there may be steps the beneficiaries or executors can take to reduce the risks, as a recent High Court case illustrated. A man had left a farmhouse and agricultural land in Cornwall to his wife, with whom he had also jointly owned a neighbouring area of land. After his death, one of the couple's daughters and her husband claimed that he had told them he wanted them...

Share Rounding Error Does Not Prevent CGT Relief

13th May, 2024 By

There are often very specific rules that must be complied with in order to claim tax reliefs, but if a small mistake arises, the courts may be able to provide assistance. In a recent case, the First-tier Tribunal (FTT) found that an investor was entitled to Entrepreneurs' Relief on the disposal of his shares in a company, despite owning one share fewer than he needed to qualify for it. The investor had agreed to purchase 5 per cent of the shares in the company for £500,000. He wished to own...

Wife Entitled to Maintenance Until Sale of Family Home

10th May, 2024 By

When divorcing couples disagree on how assets should be divided, the courts will seek to arrive at a fair outcome for both parties. In deciding how the proceeds of sale of a former couple's home should be apportioned, the Family Court agreed with the wife that she should receive maintenance payments until the sale took place. The couple had married in 2006. Following a brief separation, they had reconciled for two years before finally separating in 2022. The husband and wife both contended that they should be entitled to about...