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Appeal Court ruling helps couples making pre-nuptial agreements

Couples wishing to draw up legally binding pre-nuptial agreements have received a welcome boost from a landmark ruling by the Court of Appeal.

It means courts will have to give agreements far more weight in future and it may eventually pave the way for them to become legally binding

The case involved the wealthy German heiress Katrin Radmacher and her former husband, Nicolas Granatino, who is French. When they married they drew up a pre-nup saying that he would not make a claim on her money if they ended up divorcing.

That pre-nup would have been enforceable in their native Germany and France but they married in England, where the legal position has been less certain.

British courts will take pre-nups into account but they are still not legally binding under UK law. This has led to some debate as to their value, especially last year after the High Court decided that it would be unfair to hold Mr Granatino to the pre-nup agreement and awarded him £5.8m from Miss Radmacher’s fortune.

However, that ruling has now been overturned by the Court of Appeal which has cut the payment to £1m - a figure Miss Radmacher was happy to accept. In giving his judgment after the hearing, Lord Justice Thorpe said it was becoming "increasingly unrealistic" for courts to disregard pre-nups. He believed that a "carefully fashioned contract" could provide a valuable alternative to the "stress, anxiety and expense" of going to court.

He said judges "should give due weight to the marital property regime into which the parties freely entered".

The uncertainty about pre-nups will remain until parliament clarifies the law but this ruling by the Court of Appeal means they are far more likely to be enforced than they were in the past. It has major implications, not just for the wealthy but for millions of ordinary couples as well, as Lord Justice Thorpe was keen to point out.

"There are many instances in which mature couples, perhaps each contemplating a second marriage, wish to regulate the future enjoyment of their assets and perhaps to protect the interests of the children of their earlier marriages upon dissolution of a second marriage.

"They may not unreasonably seek that clarity before making the commitment to a second marriage."

The Court of Appeal ruling will influence future divorce settlements with the presumption being that pre-nups should be enforced unless there are compelling reasons to doubt their validity. Such doubts might arise if one party signed without getting proper legal advice or if someone failed to disclose all their assets when the contract was being drawn up.

The ruling means that people drawing up pre-nuptial agreements can feel more confident that their wishes will be followed. This is of particular value to older couples who may be far from rich but may still have built up considerable assets such as a home or small business which they may want to protect for their own benefit and that of their children from a previous marriage.

Please contact us if you would like more information about pre-nuptial agreements.

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