Pre-Nuptial Agreement Receives Court Backing

The validity of pre-nuptial agreements depends on legal advice being taken on both sides, equal bargaining positions and overall fairness. In one case, the High Court found that a wife in a big money divorce case was bound by such an agreement and awarded her just over 12 per cent of her ex-husband's millions.

The former couple had both been married before. The husband had been through a particularly bruising divorce and had three young children. After the birth of the couple's son, the wife began to press the husband to get married, but he was reluctant to marry again and only agreed to do so if she signed a pre-nuptial agreement. Although clearly upset, she did so 18 days before their wedding. That was despite her lawyer advising her that he had serious misgivings about the document, under which her financial entitlement would be greatly reduced if her marriage ended in divorce.

The couple, now in their fifties, were married for about ten years. The wife had given up her job and performed the role of mother and homemaker. The husband was a highly successful businessman and his overall wealth was assessed at between £23 million and £33 million. Living in a large country house, they spent about £250,000 on holidays annually and their luxurious lifestyle cost about £1 million a year to sustain.

Following the breakdown of the relationship, the wife claimed that she needed about £6 million to cover her reasonable needs. However, the husband, who was already a very wealthy man before the marriage, pointed to the terms of the pre-nuptial agreement, which limited her entitlement to about £1.6 million.

The wife argued that, concerned about their son's security and with plans for the wedding well advanced, she had little choice but to sign the pre-nuptial agreement. She said that she and her husband had had a 'flaming row' before she agreed to put her name to it and she felt that the bargaining power was all on his side.

In upholding the validity of the agreement, however, the Court noted that she had been warned by her lawyer in the clearest terms as to the consequences of signing it. Although upset by the dilemma that confronted her, she was fully aware of those consequences and had freely chosen to reject the professional advice she had received. She had felt under pressure, but there was nothing unconscionable about the husband's conduct and her free will had not been overborn.

The Court nevertheless found that it would not be right to hold her to the letter of the agreement. Its full enforcement would entail her having to live on a very modest income when compared with the lavish lifestyle she had enjoyed during the marriage. In the circumstances, the husband was ordered to pay her a lump sum of £2.73 million in order to meet her housing and income needs. He was also ordered to pay their son's private school fees and £30,000 a year in child maintenance.

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Putting in writing how family assets should be distributed in the event that a marriage fails can save much bitterness as well as money if the worst does come to the worst. We can advise you on the creation and negotiation of pre- and post-nuptial agreements.
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