November 2023

Interview with…charlie bell

Next up we interview Charlie Bell, Co-founder and Partner at Bortoft Bell, to address some frequently asked questions surrounding the hot topic of nuptial agreements (i.e. pre and post-nuptial agreements):

I am getting married this year, when is the best time to start thinking about a pre-nuptial agreement and engaging lawyers?

Charlie: There are no hard and fast rules about how long before a wedding an agreement should be signed by the parties.  However, if it can be avoided, it is best that the agreement is not signed in the immediate run up to the wedding to avoid the risk of one party later asserting that they were under undue pressure to sign it. I generally recommend the agreement should be signed at least 28 days before any wedding. 

Where this isn’t possible, I recommend that the agreement is still executed, but that a postnuptial agreement, in the same terms, is also signed by the parties shortly after the wedding. 

It is best for any agreement to be signed not more than 12 months before the wedding date, to ensure that the financial position upon which the agreement is based is sufficiently contemporaneous with the wedding.

I am worried that trying to negotiate a pre-nup will negatively impact our relationship and create tension before our wedding – can we both have the same lawyer to minimise any potential acrimony?

Charlie: In my experience, the smoothest prenuptial agreement negotiations are those where the parties have discussed in advance, at least in general terms, what they are each looking to achieve and include within the draft agreement. There tends to be less back and forth between lawyers where the couple have had these discussions in advance.

Parties do not always feel comfortable having those discussions directly and therefore I often prepare agreements with one party, and the first time that their fiancé/e sees the terms is when the draft agreement is sent to them.

Whilst it is now possible to have one lawyer act for both parties in respect of a divorce in certain circumstances, it would not be advisable for a couple entering into a prenuptial agreement to try to instruct the same lawyer. Doing so could potentially be used by one party to seek to undermine the validity of the prenuptial agreement. To that end, it is always advisable that both parties have independent legal advice upon the terms of the agreement.

I have heard that pre-nups are not binding, but my partner wants us to enter into one anyway. What are the benefits of a pre-nup?

Charlie: The law in relation to prenuptial agreements provides that a properly drafted and executed agreement shall be binding upon the parties provided that it is fair. What is fair depends on the circumstances of the case. It was stated in the leading case of Radmacher v Granatino that an agreement which leaves one party in a “predicament of real need", whilst the other enjoys one that is sufficient or more, is unlikely to be considered fair. Real need is likely to mean that one of the parties cannot suitably rehouse themselves. What constitutes suitable housing will depend on all of the circumstances of the case including the length of the marriage, whether there are children, the size of the assets, the standard of living enjoyed during the marriage and the contribution by the parties both in terms of financial contribution and domestic contribution. Generally speaking, anyone entering into a prenuptial agreement should be prepared for the terms to that agreement to be binding upon them.

It was also stated in Radmacher that “if the devotion of one partner to looking after the family and the home has left the other free to accumulate wealth, it is likely to be unfair to hold the parties to an agreement that entitles the latter to retain all that he or she has earned”.

The advantages of prenuptial agreements can be:

1. a. Autonomy. They allow parties to set their own rules as to how their assets will do be divided between them upon divorce, rather than being bound by the default prevailing legal framework.

2. b. Asset protection. Provided that the implementation of the terms of an agreement are fair, a well drafted prenuptial agreement can ensure that parties only divide certain assets in the event of a divorce.

3. c. Clarity. The overwhelming majority of people do not have a good understanding of the financial consequences of marriage and divorce upon their assets at the point of entering into a marriage. As part of the preparation for prenuptial agreement the parties should receive advice as to the law both with and without a prenuptial agreement, allowing them to make informed decisions. Both parties to a prenuptial agreement will understand the financial consequences of them marrying and how their assets will likely be divided in the event of a divorce.

4. d. Costs. Provided that one party does not try to challenge the prenuptial agreement through the courts, the legal fees which both parties will incur in the event of a divorce will be significantly less where there is a prenuptial agreement as compared to a scenario where there is not.

We have a pre-nup, but we have now been married for 10 years. How often should a pre-nup be reviewed / updated?

Charlie: One of the limitations of prenuptial agreements is that they are, by their nature, dealing with a set of unknown future circumstances. It is usually not possible, with any degree of certainty, to understand what the parties’ financial position will be in many years hence. For this reason, prenuptial agreements often include a review clause. Such clauses are commonly drafted to provide that agreement should be reviewed in the event of significant changes of circumstances, such as birth of children, material changes of income, the loss of one party's ability to work, one party becoming unable to work etc. They often also suggest that agreements are reviewed every five years. Reviewing the agreement periodically and in the event of significant change of circumstances, likely increases their probability that the terms of an agreement will be more strictly applied in the event of a divorce.

Anecdotally, agreements are often not reviewed so it is often, in my view, preferable to be less prescriptive about the circumstances when an agreement ought to be reviewed. The fact that an agreement has not been reviewed does not mean that it is no longer valid, unless this is expressly said to be the case. It may however mean that it is more likely not to be considered as fair, particularly if there is a material change in circumstances or the passing of time (meaning that the parties’ financial position is more likely to have materially changed).

I have heard about post-nuptial agreements. My spouse and I didn’t enter a pre-nuptial agreement before we married. Can we enter into a post-nuptial agreement, and what is the difference between the two? 

Charlie: The only material difference between a prenuptial agreement and a post nuptial agreement is that a prenuptial agreement is entered into before a marriage and a post nuptial agreement is entered into at any point during a marriage. A post nuptial agreement is usually drafted where the parties intend to continue with their relationship, with can be contrasted with a separation agreement which is prepared when the parties are separating but have agreed not to start divorce proceedings at that time.

Any married couple can enter into a post nuptial agreement and do so for a host of reasons. The first stage in the preparation of a postnuptial agreement will be for one of the parties to arrange a consultation with a solicitor to discuss the position in more detail.