by Lucy Greenwood, Partner, International Family Law Group LLP.
‘Marital agreements’ (also known as ‘nuptial agreements’) which can be prepared pre or post marriage are becoming increasingly popular in England as a means of protecting assets in the event of divorce. In many parts of the world they have been commonplace for years and are sometimes referred to as ‘property regimes’.
These agreements have gained popularity in England partly owing to greater international influence, but in particular because they provide greater financial protection where one of the couple has generational family wealth, disproportionate pre-marriage assets, business assets or potentially significant inheritances. They are also particularly popular for second marriages.
Commonly the marital agreements I review have an international dimension, sometimes involving three or more jurisdictions but the protection they provide are equally relevant to national couples.
The law of England and Wales about the division of assets upon divorce remains very generous indeed to the weaker financial party. England’s laws are also considerably out of kilter with most of the world. For example, it is not uncommon in circumstances where marital assets are modest, for the English courts to order that assets which would traditionally be considered non-marital be shared in part or whole to meet the weaker financial party’s reasonable needs – a term based on the standard of living enjoyed during the marriage. Business assets are also vulnerable where the business is the main asset of the marriage. Upon learning this, it will be appreciated that this becomes of great concern to many engaged couples or their extended families, their business partners or advisers.
The primary purpose of any marital agreement is for a couple to agree how and what assets should be divided if they divorce. Many couples like to have autonomy over this process and also want to try to avoid the emotional and financial costs of litigating via the courts. They want certainty as to what might arise if they divorce.
Where an international couple with some form of marital agreement prepared in another country now live in England, or are contemplating doing so, advice on the validity and recognition of their foreign marital agreements is invaluable. It can be a harsh lesson for the stronger financial party to learn that the marital agreement or property regime they entered into in their home country or where they married, might not be valid or be given little judicial weight in England. It is therefore important, and preferably before a couple move to England, for a party to ask a specialist English family lawyer to advise upon how an English court might review their agreement and the weight it might be given.
In light of the above, it might be surprising to know that marital agreements are not binding in England. However, they do have very significant evidential weight provided they are entered into freely, with full knowledge of all relevant issues, independent legal advice, absent of duress or undue influence and the terms are deemed fair by an English court. In those circumstances they are likely to be upheld or will at least curtail any potential award.
Contrary to popular belief it is not where you marry but where you separate which is the country most likely to review any marital agreement. It is therefore important before entering into an agreement to check the validity and any practical requirements required by each relevant country. Sometimes something as simple as how the agreement was executed can be of relevance to its validity. When deciding where a marital agreement should be prepared all countries where a couple might reside should be considered. More often than not, the country where the couple is likely to spend most of their lives or which has the most robust requirements for their preparation of marital agreements is selected.
Whilst many countries accept jurisdiction clauses in marital agreements, stating where any dispute about the terms of the agreement should be heard, an English court will only in very rare scenarios be bound in part by such clauses. English courts also do not apply foreign law.
However, in some situations where the couple’s connections to another EU country are sufficiently strong, it can be possible to cite an agreement that they want their needs-based claims (including spousal maintenance claims) to be determined in that EU country.
It is therefore essential that if you or a couple you are advising are either planning to marry and prepare a pre-marital agreement or are seeking to rely on an existing marital agreement that they seek independent legal advice from a family law specialist and if there is an international element, an international family law specialist.
Lucy Greenwood (Partner)
The International Law Group LLP