British couples embrace US-style pre-nups

But will it stand up in court? Sophie Goodchild looks at the growing trend to sort out the money before the marriage
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The Independent Online

Pre-nuptial agreements, for long a luxury confined to the super-rich in other countries, are entering the mainstream in Britain. Judges in Britain are increasingly allowing them to be honoured in divorce settlements, and several law firms are promoting them, despite the fact that they are not legally binding here.

Pre-nuptial agreements are common in the United States, especially among celebrities. Donald and Ivana Trump signed one, as did Rosanne Barr and her second husband, and Catherine Zeta Jones and Michael Douglas. They involve both parties signing up to an agreed division, or even non-division, of assets, in case the couple separate. The agreement between Mr Douglas and Ms Zeta Jones is believed to be one of the biggest, with her reportedly entitled to between £1m and £2m for every year of marriage in the event of a divorce, and £3m if her husband is unfaithful.

Although the agreements are drawn up by lawyers, courts here have traditionally taken the view that such agreements undermine the concept of wedlock as a life-long union. But there have been several high-profile divorce settlements in recent months where judges have upheld the pre-marital agreement.

These include a case last April involving a chartered surveyor worth £25m who had married his pregnant girlfriend, a model with a £1m trust fund. The husband was reluctant to marry but the model's father insisted, so the wedding went ahead the day after the couple had signed a pre-nup. When the marriage failed after 14 months, the judge held her to the pre-nup, awarding her a settlement of just £120,000 plus £15,000 a year maintenance.

However, inquiries have established that there is a considerable downside to the agreements, especially for the less well-off partner, normally the woman. Traditionally, judges have awarded a wife a share of her husband's assets based on the length of the marriage, the needs of any children and how much each spouse contributed to the marriage. Yet lawyers say if these awards are superseded by pre-nuptial agreements, then women whose wealthy spouses-to-be pressure them into signing away any claim on their fortune will lose out.

There are no official statistics on how many couples sign pre-nups. The Solicitors Family Law Association (SFLA) carried out a survey two years ago on pre-nups based on interviews with 20 lawyers from different sized practices around the country. All except one said they had received inquiries about pre-marital agreements. Most inquiries were from people who wanted to reduce acrimony in any future divorce, to protect their assets or were seeking certainty in the event of a split.

Some lawyers who took part in the survey said many husbands did not know their fiancées were seeking advice on pre-nuptial agreements, although some accepted that their partners needed to protect assets for children of a previous marriage. William Longrigg, an SFLA spokesman, said pre-nups could disadvantage a spouse who had not had sound legal advice, although judges tried to act fairly in divorce settlements.

"Where the agreement is made immediately before the marriage, there may be pressure to agree to unfair terms or else face the unappealing prospect of cancelling the wedding," said Mr Longrigg, who works at the law firm Charles Russell in London.

"Where there is a dispute over an agreement, the courts are keen to ensure that they use their discretion to produce a fair outcome for both spouses, taking the fact that the couple have made an agreement together into account."

With two out of five marriages ending in divorce, there is also an emerging trend in post-nuptial agreements, where separated couples become reconciled and decide to draw up an agreement on who gets what in case they do eventually split up. Despite this, and the fact that the courts are taking pre-nups more seriously, ministers appear reluctant to reform the laws on divorce. The Government shelved proposals drawn up five years ago which banned pre-nups signed less than 21 days before marriage. Solicitors say that the Government should issue comprehensive guidance on how to draw up pre-nuptial agreements.

David Ruck, a partner at Gordon Dadds, said couples should consider renegotiating pre-nups because circumstances change. "More people will have pre-nups," he said. "They are much more common for older people who are on second marriages. But we are at a halfway house. We don't know what the law requires you to have in a contract. There should be protection for the potentially weaker party, who could be disadvantaged."

'I understood why he wanted to keep what was his'

Property developer Richard Scott breathed a sigh of relief when his fiancée and former secretary, Jane, announced at a dinner party that she would be more than happy to sign a pre-nuptial agreement.

It was a deciding factor for Mr Scott, 39, from Richmond, Surrey. He recalls: "I would probably have kept putting off the wedding if she hadn't mentioned that she would be happy to sign one. I was going to broach the subject, but after our friends mentioned it, she said she was happy to have one."

Mr Scott says that the pre-nuptial agreement was very important to him: "We got together when she was my secretary, so obviously I am more financially successful than her. I was very keen to safeguard what was mine in case we got divorced."

What would happen under the terms of the agreement if they were to split tomorrow? Mr Scott says: "I would walk away with essentially what was mine before the marriage, but that's not to say she would leave with nothing. It would be different, of course, if we had children."

He was keen to see pre-nuptial agreements made more legally binding: "I would definitely like to see them tighter. They work to my advantage in that I get to keep what I have earned."

The husband of Cheryl Jones, a dance school manager from north London, was also keen that his future wife signed a pre-nuptial agreement before walking down the aisle with her.

Ms Jones, 29, says that as her husband was wealthier than she was she understood his reasons for wanting an agreement.

"I understood why he wanted it. David works in financial markets and is financially more successful than me and obviously wanted to keep what was his," she says.

Ms Jones is aware that if the childless couple were to divorce tomorrow she would not be as financially secure as she is now. "If we split tomorrow I would obviously not be as well off as him," she says.

But Ms Jones does not see the arrangement as an issue. " I am not the type to be grabbing money off him anyway.

"I was very happy to sign an agreement as I think it is good to get everything sorted before the wedding. You see all these Hollywood couples fighting over millions and you think they should have got it all sorted beforehand."

Ms Jones recommends friends to get a pre-nuptial agreement. "It's definitely a good idea and I tell friends to get one. I have seen other people go through such horrible, messy divorces.

Annabel Fallon