Prenuptial Agreements:Radmacher - one year on

The 20th October 2011 was the one-year anniversary of the landmark ruling handed down by the Supreme Court in the case of Radmacher v Granatino [2010] UKSC 42 in which it was held that the prenuptial agreements could be given decisive weight when considering financial settlements upon divorce. To what extent does this case have implications for those seeking to protect their assets in the event of divorce and what has been the effect of the decision in practice?

Mr Granatino and Ms Radmacher (formerly Granatino) entered into a prenuptial agreement in 1998 at the instigation of the wealthy wife which provided that neither party was to acquire any benefit from the property of the other during the marriage or on its termination. At the time, the husband held a well-paid position in banking which he subsequently left to pursue an academic, but significantly less well-paid, career. Following the issue of divorce proceedings in 2007 the husband applied to the Court for it to determine a financial settlement even though the prenuptial agreement stated that the couple would waive any financial claims against each other in the event of their divorce. Initially, the Court held that the prenuptial agreement was defective and awarded the husband a capital award of £5.56 million plus £504,000 for housing in Germany and periodical payments of £70,000 per year for the couple’s two daughters. The wife successfully appealed and the Court of Appeal reduced the husband’s award in recognition of the “decisive weight” of the prenuptial agreement. The husband appealed to the Supreme Court who upheld the decision of the Court of Appeal.

The decision in Radmacher does not mean that pre or postnuptial agreements are automatically enforceable. The law dealing with financial settlements upon divorce is set out in the Matrimonial Causes Act 1973 (MCA) and it is not possible for couples to oust the jurisdiction of the Court by entering into a prenuptial agreement or an agreement after the marriage (postnuptial). However, what the case of Radmacher did achieve was to set out the circumstances which will enhance or detract from the weight to be given to any agreement when considered alongside the ‘section 25’ factors of the MCA. For example, it is important that each party receives independent legal advice and that there is full disclosure of each party’s financial resources. It is also important that the agreement is entered into freely, in the absence of undue pressure or duress. It is therefore the role of the solicitor to carefully draft any proposed agreement to ensure that its terms will be followed by the Courts in future, should one party attempt to renege on the agreement and make an application to the court for a financial order.

The publicity surrounding Radmacher and prenuptial agreements in general has seen an increase in the number of enquiries and instructions received by the Matrimonial Team at Rogers & Norton from individuals seeking to protect their assets. The trend of people marrying later in life, sometimes for second or subsequent times, means that many individuals have pre-acquired assets which they bring to a marriage. Also, many individuals are keen to protect any future wealth such as inheritance from their family.

Prenuptial and postnuptial agreements can include provisions regarding existing wealth and assets, future inheritance, gifts during the marriage and the practical and financial arrangements for children. Our Matrimonial Team is experienced in advising in relation to a proposed agreement, drafting both prenuptial and postnuptial agreements and advising upon agreements prepared by other solicitors to ensure they are clear and fair in light of the guidance set out in the Radmacher judgment.

If you are considering entering into a prenuptial or postnuptial agreement and would like some advice then please feel free to contact Sophie Key or Amy Walpole on 01603 675648 or email matrimonial@rogers-norton.co.uk.