19 November 2010

Prenuptial agreements given ‘green light’ by the Supreme Court


The Supreme Court has held a French husband, Nicholas Granatino, to a prenuptial agreement which he signed prior to his marriage to German heiress, Katrin Radmacher.

Mr Granatino challenged the decision of the Court of Appeal which had significantly reduced the financial award he received from the High Court. The Supreme Court dismissed his appeal and has clarified the law relating to pre- and postnuptial agreements.

Any suggestion that prenuptial agreements are not binding in England and Wales has been overturned as a result of the decision. The presumption now is that they are binding, unless they are unfair.

The Supreme Court has swept aside the view that prenuptial agreements are contrary to public policy. All of the circumstances of the case will be taken into account. The Court retains its discretion to overrule the agreement although weight will now be given to individual autonomy. The Supreme Court emphasised that the key is ‘fairness'. Each party should intend that the agreement should be effective; should be fully aware of the implications of entering into the agreement; should have all of the information that is material to his or her decision; and should intend that the prenuptial agreement should govern the financial consequences of the marriage ending.

When assessing whether the terms of a prenuptial agreement are unfair, the Court will consider several key factors including whether the needs of one spouse or the requirement for compensation for sacrifices made during the marriage justify a departure from the terms or whether the terms prejudice the reasonable requirements of any children of the family.

In this case the Supreme Court decided the agreement was freely entered into and that both parties fully appreciated its implications. Accordingly, it was only fair to depart form the agreement to the extent necessary to cater for the needs of the children.

The Supreme Court has therefore endorsed the importance of prenuptial agreements in relation to the treatment of inherited assets or assets acquired by one party prior to the marriage. The Court has indicated that the shorter the marriage, the more likely the terms will be upheld in their entirety. The preservation of landed estates, ancestral homes and farms is of utmost importance to landowners and their families. Those contemplating marriage where there are significant inherited assets or inheritance prospects at stake should consider having a prenuptial agreement given the greater protection it should now afford in the event of divorce.

Category: Article