Prenuptial Agreements

Lord Meston Excerpts

Thursday 27th February 2025 Lords Chamber

[Lord Meston (CB)]

My Lords, I have practised in family law as a barrister for many years and latterly have worked as a family judge. I do not find it altogether easy to recognise the picture of how the law now works, as portrayed by the noble Baroness, Lady Deech, but never mind; that is a debate for another day.

Given that the median duration of marriages ending in divorce is now just under 13 years, it is a good time to assess the effect on law and practice of the important decision of the Supreme Court in Radmacher 15 years ago. Typically, the parties to prenuptial agreements may legitimately wish to ring-fence inherited or previously acquired assets or, as the noble Baroness, Lady Shackleton, said, wish to ensure provision for children of previous relationships. Not surprisingly, agreements are now said to be popular with the farming community, with their particularly illiquid assets. All who enter into such agreements will naturally wish to avoid the costs and hazards of litigation.

The perception and use of prenuptial agreements have developed remarkably. They were felt by some to devalue a view of marriage for life, distastefully requiring the involvement of lawyers in what was supposed to be the happy period leading up to the marriage ceremony. They used to be seen as required only by wealthy older men after several unsuccessful trips around the matrimonial course, who wanted to protect themselves in case the latest candidate for matrimony turned out to be a gold-digger—at least, from the man’s point of view. They were also seen as disadvantaging women, who were asked to waive some or all of what they might expect to receive if the marriage later ended in divorce, and as allowing parties to contract out of the responsibility to meet each other’s needs.

In a classic American case, the very wealthy husband, 25 years older than the wife, presented her with an agreement only a few hours before the marriage ceremony, and threatened to cancel the marriage if she did not sign. She had sparse knowledge of his finances and did not have any independent advice, only a session with a lawyer selected by the husband. That lawyer, to his credit, advised her not to sign. However, in spite of that advice, she signed the agreement and the marriage went ahead. Thirteen years and two children later, there was a divorce and costly litigation across two state jurisdictions.

The decision of the Supreme Court in Radmacher has reduced the prospect of such a scenario in the United Kingdom. Rushed agreements with limited legal advice and limited disclosure, particularly if they appear unfair and very different from what the court might otherwise order, cannot expect to be upheld, and in reality can be worse than having no agreement at all.

The Law Commission’s later well-researched and reasoned recommendations in 2014 included the crucial requirements for there to be independent legal advice for each party and sufficient financial disclosure, and for the agreement to be completed at least 28 days before the wedding. Although those recommendations are not yet in statute, they undoubtedly already reflect current good practice and have helped to make agreements more popular and effective.

I noted with some surprise the doubt expressed by the noble Lord, Lord Faulks, questioning the need for a cooling-off period of 28 days. However, there is a need to protect those who get married in a fever, to quote the old song.

The remaining area of controversy concerns whether and in what circumstances the court might go beyond an agreement, freely and properly entered into, that would otherwise be expected to be binding upon the parties. There is a clear distinction between agreements unfair from the outset and agreements that may later operate unfairly if access to legal remedies is severely restricted. It was recommended by the commission that the court’s jurisdiction to make provision for needs should not be ousted by qualifying agreements, so that no party would be left unjustifiably without resources following separation. To that extent, the mere fact of an agreement cannot make fair what may otherwise appear or become particularly unfair.

The Law Commission said there was little evidence of how agreements operate in practice and that it would be helpful to have more relevant information about how popular they are, how they are treated in litigation and how many cases settle on the basis of agreements. I suggest that it would also be helpful to have reliable overall evidence of the difference between the outcomes that prenups produce and the outcomes that the court would otherwise direct. I suspect that the majority of prenups are not seen by the courts because the couples involved manage to stay married and leave the agreement in a drawer, and that many other agreements are seen by the courts only because the parties simply wish to comply with it by submitting it in support of an agreed order, to reflect what has been agreed.

It is likely that those prenups that are challenged, at least by those with enough money to do so, come before the court only because of inadequate drafting or unforeseen changes in circumstances, or because of an irresistible dispute about jurisdiction if the agreement was made outside England and Wales. However, I seriously question the number of challenges that was suggested by the noble Baroness, Lady Deech, but statistics will prove one or other of us right or wrong.

Carefully prepared agreements, although unromantic and transactional, can provide couples with a sense of security and certainty, reducing some of the acrimony and expense in the event of later permanent separation, and reducing the temptation to divert or conceal assets ahead of a divorce. Specialist legal practitioners can now help parties to achieve fair, realistic and civilised agreements, capable of later revision, that the courts will uphold. Indeed, if in doubt, the parties can now ask the court for an early decision as to whether the agreement is determinative of their financial affairs.

Nevertheless, there remain parties who sign agreements and marry, having ignored, rejected or not understood good legal advice that they could or would be better off marrying without the agreement. The Law Commission described the argument for autonomy as strong but as raising concerns that some may still enter an agreement unwillingly or with unrealistic optimism. The chances of that are not likely to be much diminished by any legislation. As the right reverend Prelate suggested, contractual autonomy has to be seen in the peculiarly emotional context of these agreements.

It is clearly premature to anticipate a final report by the Law Commission on the much wider question of whether and how substantial reform of financial remedies legislation should be undertaken, and any decision by the Government on that. Paragraph 7.98 of the commission’s recent scoping report suggests that, if there is not to be major change, its recommendations relating to agreements could be implemented straightaway, but, if major changes are expected, the recommendations about agreements will need to be reconsidered. We should be grateful to the noble Baroness for making us think hard about that.

If there are major wholesale changes, many existing agreements could well need postnuptial revision and renegotiation. An important component of any good advice is what a court might do in the absence of a prenup to protect the economically weaker party. Until it is clear what the law is to be in the foreseeable future, it will be hard to give satisfactory advice to those who need it about what might happen at a much later date.

If reforms are undertaken piecemeal, with prenups legislated for in advance of substantive law reforms, there is a risk that some agreements based on the substantive law in force when the agreement was reached would become unfair, and so would either produce an unfair result or have to be renegotiated, if the parties were willing to do so, failing which they might have to go to court. However, I accept that, to some extent, that risk exists irrespective of whether the law relating to prenups is reformed as the noble Baroness has proposed, and irrespective of changes that may be further down the track

Accordingly, meanwhile, until clarity is reached and a decision is made about how we should proceed, I suggest that the approach that has developed following Radmacher now works well, and that the family courts can and should be trusted to continue to deal with individual cases as required.