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Share Article: Plan to fail or fail to plan? A guide to pre and postnuptial agreements

Posted by Funlola Oluwole, Paralegal

Planning the financial repercussions of the failure of your marriage is not the most romantic of tasks done in advance of your wedding day. However, relationship planning can be a crucial exercise for couples with assets and interests to protect.
Prenuptial agreements, or ‘prenups’, are contracts between soon-to-be wed couples seeking to protect their assets in the event of a divorce. Postnuptial agreements have the same effect but are executed after the parties have married. The recent case of Traharne v Limb [2022] EWFC 27 is concerned with a wife, who sought a financial remedy exceeding what was agreed in a postnuptial agreement she had entered into with her husband in 2018. The wife argued that her husband’s coercive and controlling behaviour had pressured her into signing the agreement.

According to the leading case of Radmacher v Granatino [2010] UKSC 42, for the court to uphold the autonomy of a nuptial agreement, there must be free will, intention and full disclosure. In Traharne, Mr Justice Cohen provides his insight on these factors:

Free will
Traharne confirms that coercive and controlling behaviour falls within the definition of ‘unconscionable conduct’, identified in Edgar v Edgar [1980] 2 FLR 19, that can strip an individual of her ability to enter into a nuptial agreement of her own free will. Consequently, whilst this was not found in the facts of Traharne, evidence of such behaviour occurring at the time that parties had signed a nuptial agreement can detract from the weight that the court would give to it in financial proceedings.

Intention
Nuptial agreements should reflect the parties’ intentions as to the financial consequences of the end of the marriage. In Traharne, Mr Justice Cohen suggested that when negotiated against the backdrop of reconciliation, a nuptial agreement’s intention is concerned more with protecting the relationship than the interests of each party upon marriage breakdown. The wife signing the postnup with a view to preserve her marriage was found to have impaired her judgement and subsequently her needs were not met in the agreement.

Mr Justice Cohen also discussed the significance of looking back to the intention of the parties at the time of signing, when considering the fairness of a nuptial agreement. A pre or postnup must address all material matters in respect of a couple’s financial portfolio, as having unresolved issues can detract from the weight given to the agreement by the court. As a result of this occurring in Traharne, Mr Justice Cohen found that it was not fair to hold the parties to their postnuptial agreement.

Full financial disclosure
Interestingly, Mr Justice Cohen found in Traharne that the absence of the husband’s financial disclosure was not a damaging factor in relation to the autonomy of the postnup. However, this is the case as the wife knew what assets her husband possessed, the husband had answered all questions put to him about his means and she had signed a disclaimer confirming that she was advised not enter into an agreement without there being full disclosure.

Typically, exchanging full financial disclosure is vital to ensure that an individual has access to all information material to her decision as to what income and capital provisions should be included in a nuptial agreement.

Do I need a nuptial agreement?
Although usually associated with celebrity marriages, nuptial agreements are becoming increasingly popular among everyday couples. They are particularly useful in circumstances where a party:• has substantially more wealth than the other;

  • is entitled to a sizable inheritance;
  • has significant business assets;
  • has been married previously;
  • has serious health conditions; or
  • has children from a previous marriage.

If you are considering making a pre or postnuptial agreement, contact our specialist Family Matrimonial Finance Team on 020 7935 3522.

Whatever your personal circumstances the above is only a guide and we would advise you to contact us to obtain definitive advice as you will appreciate that each person’s circumstances are unique to them.

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