At last we have a decision from the Supreme Court regarding the validity of pre-nuptial agreements in the decision of Radmacher v Granatino.
 
Sad as it may sound, anyone entering into marriage – whether it be first, second or third time round – is very aware that, should the marriage fail, the financial consequences are likely to have a huge impact upon them.  As a firm, we advise clients that to minimise the financial impact of a divorce, a pre-nuptial agreement should be considered. It is not always an attractive proposition. Often the heart overrules the head. Coupled with the law not being 100% certain, clients have undoubtedly been put off.

However, on 20th October 2010 the case of Radmacher v Granatino was decided. It is a decision of the Supreme Court, highest Court in the land, and is therefore, binding on all lower Courts.

At first glance you might think that the Radmacher case does not fit your circumstances and is therefore of no relevance to you. Katrin Radmacher belonged to a very wealthy German industrial family and was said to be worth around £100 million. In 1998, she married Nicolas Granatino, who is French and was a banker at the time. Before their marriage, they entered into a pre-nuptial agreement. This was largely at the insistence of the Wife’s family. The agreement was prepared by a German Notary and was to the effect that neither of the parties wished to make any claim against the other in the event of divorce.

The Husband did not take any independent legal advice before signing the agreement. The Husband also did not speak German and the document was not translated. The clause in the agreement whereby their respective assets should have been inserted was deleted at the Wife’s request, on the basis that they each knew each other’s assets. There was no financial disclosure. The Husband knew the Wife was very wealthy. The Husband worked as an investment banker in London, earning several hundreds of thousands of pounds, but gave it all up to return to academia, earning about £30,000 per annum.  

In the High Court, the Husband received just over £5 million. When the case went to the Court of Appeal, his award was cut down further, and the case was appealed further to the Supreme Court who gave the following important guiding principle:-

‘The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless, in the circumstances prevailing, it would not be fair to hold the parties to their agreement.’

As to was there any material lack of disclosure, information or advice, The Supreme Court said:-

‘What is important is that each party should have all the information that is material to his or her decision, and that each party should intend that the agreement should govern the financial consequences of the marriage coming to an end.’

The Supreme Court has undoubtedly given the strongest steer to date as to the enforceability of pre-nuptial agreements. If you remain unconvinced then what is without doubt is that if you do not enter into such an agreement, you clearly cannot present an argument as to how you intended the family wealth to be divided. Enter into the agreement, be fair and open about your financial position, and you are equipped with a forceful argument to present to the Court.

Do nothing at your peril!