Prenuptial agreements were recognised as enforceable under British divorce law for the first time in the case of Katrin Radmacher and Nicholas Granatino.
Before Katrin Radmacher and Nicholas Granatino married in 1998, the wealthy German heiress ensured that her husband signed a prenuptial agreement promising to make no claims on her fortune if the marriage failed. Katrin Radmacher was a wealthy woman with shares in a family company worth around £50 million and further assets of around £55 million all of which were inherited before her marriage. At the time of the breakdown of the marriage Mr Granatino was earning £30,000 as an Academic at Oxford University.
The prenuptial agreement was written and signed in Germany, however as the couple lived in London the case was decided in England & Wales, and came before the Supreme Court in October 2010.
The court decided that prenuptial agreements should have “decisive weight” in the English Divorce Courts and this left Mr Granatino holding an earlier settlement awarding him £1 million and the use of the family home until his younger daughter turned 22. He was to have no further claim on the £100 million fortune.
The judges felt that in cases where prenuptial agreements have been entered into fairly they should be followed by the court unless there is a significant reason to depart from the terms of the agreement. Until this decision, judges had occasionally taken such agreements into account but unlike in Scotland or in Europe they were never legally binding.
The decision demonstrates the first move towards giving proper legal status to prenups and the Law Commission is due to report in 2012 as to whether a change in the law is now necessary.
Who are prenuptial agreements suitable for?
Although any couple can set up a prenuptial agreement in practice it is popular with couples marrying later in life or entering second marriages where there are likely to be assets worth protecting or where there are children from a former marriage whom the parties would like to protect. Even once a marriage has taken place couples can enter into postnuptial agreements and these state the intentions for the division of assets once the marriage has taken place. Both pre and postnuptial settlements can be used for civil partnerships.
What needs to be included?
Any agreement must include estimates and official valuations of the assets that the couple hold. It is important for a prenuptial agreement to take into account the prospect of children and the agreement must be entered into freely. The paperwork should be drawn up well in advance of the wedding if it is to have a chance of being upheld and should be signed at least 21 days before the big day. The golden rule is the more thought and preparation that is given to the agreement the better. This will prevent one party claiming there has been undue pressure to sign. If all these basic rules are followed, it is far more likely that an agreement will be upheld by a court.
As ever, caution is the watch word and a properly drawn up prenuptial agreement or postnuptial agreement by a specialist legal adviser will save hundreds and possibly thousands of pounds in the long term.