Landmark Victory over Pre-nuptial Agreement

A ruling earlier this month by the Court of Appeal has held that Family Courts should take account of pre-nuptial agreements when dividing assets following the breakdown of a marriage.

One of Germany’s richest women, Katrin Radmacher has successfully challenged a decision by the High Court last year awarding her former husband £5.85m for his own use, despite a pre-nuptial contract being in existence. That award has, on appeal, been cut to about £1m by way of lump sum in lieu of maintenance, together with a fund of £2.5m for a house which will be returned to Ms Radmacher when the youngest of the couple’s two daughters, who is 6, is 22 years old.

In this landmark judgment, 3 highly respected Court of Appeal Judges have ruled that pre-nups can be decisive. Up until now, commonly Judges have regarded pre-nups as ‘persuasive’ but in the future, the court is likely to regard them as binding unless there is reason not to do so.

Implications

This decision allows the law to change with the times and enables responsible adults to enter into an agreement to decide the division of their financial assets should their marriage break down.

The high value assets in this case are unusual. However, for many people, there could be reasons why those of more modest means should enter into a pre-nup.

Couples entering second marriages may want to protect their financial assets to ensure children from their first marriage do not lose out. Others, who have inherited or who are due to inherit, may also consider the drawing up of a pre-nup to provide financial security.

Pre-nups will not provide 100% security, but as a result of this ruling will have much greater influence than they have done historically.

If you would like advice on pre-nuptial agreements, please call me on 01772 258321.