Couples who enter into a pre-nuptial agreement (PNA) with their eyes wide open can expect to be bound by its terms. However, as the outcome of a ‘big money’ divorce case made plain, judges have the power to effectively rewrite them if they fail to make fair provision for the reasonable needs of either husband or wife.

The case concerned a middle-aged couple whose realisable assets, worth more than £43 million, were almost entirely held in the wife’s name. On their wedding day they signed a PNA by which the separation between their assets was maintained. Under its terms, the husband’s financial entitlements on divorce were restricted to about £190,000 in cash and repayment of a £250,000 loan.

Following a hearing, a judge rejected his arguments that the PNA should be entirely disregarded on the basis that he entered into it in haste and without legal advice. He was found to have signed it freely and with a full appreciation of its meaning and consequences. The judge suspected that he had come to regret signing the document in the belief that it would never come into effect.

In ruling that the PNA failed to provide fairly for his reasonable needs, however, the judge noted that he had made a full contribution to the marriage and the upbringing of the couple’s three children. The wife having received a huge sum on the sale of her family’s business, the whole landscape of the couple’s finances had changed dramatically since the PNA was signed.

The judge directed the wife to provide the husband with a £2.5 million house that would revert to her on his death. She was further ordered, amongst other things, to pay him £1.2 million in capitalised maintenance and to cover his substantial debts. His total financial award came to around £1.9 million.

Had the couple married without signing a PNA, the judge suspected that, given the scale of the wife’s fortune, the husband’s award would have been significantly higher. The outcome, however, properly recognised the limiting consequences of the PNA, balanced against his reasonable needs.

Source: Private Client News