Will your pre-nuptial agreement stand the test of time?
More couples than ever before are signing pre-nuptial agreements before getting married or entering into a civil partnership.
This includes couples seeking to preserve inherited wealth, those in second marriages wishing to protect what they are bringing to the new relationship and wealthy couples who marry late and want to protect wealth they have created before tying the knot.
A recent court case illustrates how important it is to make sure your pre-nuptial agreement is not only carefully drafted but fair to both parties to ensure it stands the best chance of being upheld if you end up in court.
What happened in this case?
Mr Anil Ipekci was working as a concierge at a New York Hotel when he met Morgan McConnell, the great granddaughter of the founder of Avon cosmetics and the beneficiary of trusts worth at least £49 million.
Two weeks before they married in 2005, he signed a pre-nuptial agreement which meant he was entitled to a half share of the increase in value of three properties owned by his millionaire wife if they divorced.
The trouble was, by the time they split up - 12 years and two children later - the properties had not gone up in value at all meaning Mr Ipekci, by now living and working in London and earning about £35,000 a year, was entitled to precisely nothing.
The judge, who also said it was in the interests of the couple's two children that Mr Ipecki had a reasonable home they could stay in when visiting him, awarded him a lump sum including £750,000 to buy a house, £28,000 to pay off his credit card and bank debts and £99,000 to cover unpaid legal fees.
On what did the judge base his decision?
Although pre-nuptial agreements, known as 'pre-nups', are not legally binding in England and Wales, courts do give them serious consideration when coming to a decision providing certain formalities have been met but can and will depart from any terms if the court considers the agreement to be unfair at the time of the divorce.
In this case, Mr Justice Nicholas Mostyn said the agreement was patently unfair because it did not meet Mr Ipekci's needs. In fact, it would leave him penniless. Other flaws included:
- The agreement, made in New York, would have been ineffective there anyway because it didn't comply with local law;
- Both parties should have received independent legal advice before signing - Mr Ipekci was advised by the solicitor who had acted for the wife in her first divorce putting a big question mark over impartiality.
Making a Strong Pre-nuptial Agreement
It is vital to make sure that any pre-nuptial agreement is as likely to be upheld by the court as possible by:
- Taking independent legal advice and disclosing fully all assets and income to each other;
- Signing 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;
- Ensuring 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. For example, a pre-nup which leaves one party with virtually nothing and the other comfortably off, or does not make provision for children, is highly unlikely to be seen as reasonable;
- Keeping your pre-nuptial agreement current. Once drawn up and signed, this means reviewing it regularly - at least every five years and automatically on the birth of any children.
For more information, please see our Legal Guide: What is a pre-nuptial agreement and should we make one?