Considering a pre-nuptial agreement? Be honest about your finances or risk it being declared worthless if you separate
A couple’s pre-nuptial agreement has been ruled invalid by an Appeal Court judge because the wife deliberately and fraudulently failed to disclose almost £48 million of her £60 million personal fortune.
As a result, the husband’s financial needs – including his housing provision – are to be re-assessed meaning he could now receive more money than if the pre-nup had stood.
This case highlights the vital importance of full and frank financial disclosure when entering into a pre-nuptial agreement whether you are protecting a fortune or a more modest sum.
It clearly illustrates that without total transparency at the time of signing, the courts will not uphold these agreements heaping potentially expensive litigation, stress and upset on top of the emotional toll of separation.
What is the background to this pre-nup dispute?
Simon Entwistle, a chartered accountant, and Jenny Helliwell, an interior designer with a wealthy businessman father, married in July 2019 and both signed a pre-nuptial agreement on the day of their wedding.
This agreement, known as a ‘drop hands’ agreement, set out that each would retain their own property if they divorced, divide any jointly owned property equally and make no financial claims against the other.
The couple, who had no children, separated three years later with Mr Entwistle seeking a settlement of £2.5 million based on the fact that his wife had assets of around £74 million.
She refuted this and applied for the couple’s pre-nup to be enforced. Under this, Mr Entwistle had agreed he wouldn’t receive a settlement if they divorced. She also made him an open offer of more than £800,000.
What did the courts decide in this pre-nup battle?
Initially, the High Court upheld the pre-nuptial agreement on the basis that Mr Entwisle knew how wealthy his wife was and had signed the agreement voluntarily. The judge awarded him a lump sum of £400,000 to meet his basic needs.
However, Mr Entwistle appealed this decision claiming his wife had failed to disclose around 73% of her wealth including business shares, land in Dubai and a 50% interest in her mother’s £3 million Wimbledon home.
The Court of Appeal, which was highly critical of the High Court’s decision, agreed with him concluding that Ms Helliwell’s deliberate non-disclosure of assets worth almost £48 million amounted to fraud. This meant, it ruled, the pre-nup ‘cannot stand’.
Lady Justice King was also extremely concerned about a ‘clearly highly undesirable’ email Ms Helliwell sent to Mr Entwistle on the morning of the wedding in which she suggested that the financial disclosure element of the agreement be left out altogether or, if appended, that Mr Entwisle waive his right to legal advice on it.
“In the end, of course, the husband had the worst of both worlds,” the judgement read, “no legal advice once disclosure was made and no honest disclosure to inform his decision making.”
- The Appeal Court has now referred the matter back to the High Court for Mr Entwistle’s needs to be fully re-evaluated unless a settlement is reached in the meantime.
What does this pre-nup case tell us?
Although pre-nuptial agreements have been given greater recognition in recent times they still remain non-binding upon the Court. This means that the Courts retain full powers to deal with financial claims and to make orders, within divorce/ dissolution proceedings, which could be different to the contents of the agreement. The Court can take into account some or all of the agreement.
As the law stands, a nuptial agreement will only be considered valid if clear and accurate financial disclosure is made by both parties at the time of signing.
This transparency is considered key when a court scrutinises whether to uphold a pre-nup or not and underlines why being upfront and truthful is so important.
How do you make a strong pre-nuptial agreement?
For the best chance of a pre-nuptial agreement being upheld, it’s important to:
- Take independent legal advice and disclose fully all assets and income to each other.
- Sign it at least 21 days before you get married and ideally with at least a couple of months to spare so you have time to take legal advice and consider the contents carefully first.
- Ensure it is fair by giving sufficient thought and consideration, with the help of your solicitor, to the needs of your partner and any future children.
- Keep your pre-nuptial agreement current. Once drawn up and signed, this means reviewing it regularly – at least every five years, on the birth of any children or after a change in personal or financial circumstances.
For more information, please see our Legal Guide: What is a pre-nuptial agreement and should we make one?
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