The rise of the pre-nup?
Date:
26 March 2014
At the moment, the legal status of pre-nuptial agreements in England and their treatment by a Court upon divorce is not entirely clear. The cases are inconsistent but it might be suggested that the significant case law in England has been nudging generally in the direction that pre nuptial agreements should be upheld. Such an agreement is one of a number of factors which is taken into account by the Court, but the Court still retains considerable discretion as to whether or not to enforce its terms. Such an approach doesn't help litigating parties nor does it assist legal advisors. Therefore, introducing QNAs ought to bring greater certainty to those south of the border wishing to agree and clarify in advance what contractual provisions may be taken into account on divorce.
In order to protect those entering into QNAs, the English Law Commission have set out some suggested conditions that a pre-nuptial agreement would need to satisfy to be classed as a QNA. Firstly, the agreement must contain a statement that both parties are aware that they are entering into a QNA which will restrict the court's discretion to make financial orders. Secondly, there has to be full disclosure between parties in relation to their finances. Thirdly, both parties require to take independent legal advice and the agreement should contain signed certificates from solicitors confirming that this has happened. These requirements were considered important by the Law Commission since the agreement will exclude or restrict a court's powers to make orders on divorce. In addition, a QNA must be signed at least 28 days before the wedding, which is designed to reduce any pressure to sign an agreement before an impending wedding. Finally, it must be entered into as a deed and be contractually valid.
It is important to note that the English Law Commission has stated that QNAs should not be allowed to remove any assets required to meet parties' needs, or those of their children, from the pot of assets for division. That rather implies that the perceived needs of the parties and/or their children will always override the terms of any contract freely entered into by the couple before or after they got married. As such, QNAs will only be relevant to couples who have surplus assets over and above those required to meet the financial needs of both spouses and the financial responsibilities relating to their children. On the basis of past experience, how that is measured by different courts is likely to be inconsistent. What proportion of the population might be affected by such arrangements is also difficult to predict given the current economic climate.
All of that said, this is an important development in English Family Law and ought to carry some influence, at least, to Scotland.
The position in Scotland remains that couples have been, and continue to be able, to enter into contractually binding pre-nuptial (or post-nuptial) agreements. It is generally recognised in Scotland that parties to a properly framed pre-nuptial marriage contract can have some confidence that it will be favourably considered by a divorce court, and unless there is some fundamental problem with the contractual aspect of the agreement such as it was entered into by coercion, it ought to be upheld by the Courts (if challenged) on divorce. Those who sign a pre or post nuptial agreement should expect to be bound by it, as long as it is fair and reasonable at the time it was entered into. Therefore, those who divorce in Scotland can be reasonably confident that a Court will not interfere with what was previously agreed between them. The international recognition of pre nuptial agreements is a complex area of law, but as between Scotland and England at least, you may still find that Scotland serves you better than England for the purposes of giving effect to your intentions upon divorce.
The Morton Fraser Family Law Team is fortunate to include two dual Scottish and English qualified lawyers who are able to advise on which jurisdiction is likely to serve your best interests. We take all factors into account, including the differences in approach to pre-nuptial agreements north and south of the border.
If you are thinking about entering into a pre-nuptial agreement, or have entered into a pre-nuptial agreement and you are wondering whether it would be more appropriate for your matrimonial affairs to be dealt with in Scotland or in England, please get in touch with a member of the team to discuss matters.
