For richer, but not necessarily for poorer – pre-nups to become law

By Andy McSmith
Wednesday 05 January 2011 01:00

Spectacular divorce battles like that which ensued after the break-up of Sir Paul McCartney and the model Heather Mills, costing the former Beatle £24.3m, are expected to be consigned to history after the Law Commission produces its long-awaited report on "pre nup" agreements next week.

Numerous rich people who have married less-well-off partners have often insisted that their betrothed sign an agreement on how their wealth is to be carved up in the event of divorce – but up to now, these pre-nuptial deals have not had the force of law.

That could be about to change as the Law Commission completes the report it was asked to draw up 15 months ago, by the Labour government. Whatever they recommend will apply equally to married couples and those who have entered into civil partnerships.

The Law Commission team, headed by Professor Elizabeth Cooke of Reading University, delayed their report while they waited for the Supreme Court to rule in the case involving the 41-year-old German heiress Katrin Radmacher and her French husband, Nicolas Granatino.

The couple had signed an agreement before their wedding in 1998, under which he would not ask for any of her money if the relationship broke up. They had known each other for only eight months. She said later she wanted the pre nup as reassurance that he was not marrying her for her fortune, thought to be around £100m. At the time, he was a banker with JP Morgan earning more than £120,000 a year, and expected to become a multimillionaire, but after four years, he gave up his job to go back into academic life at Oxford University on about a quarter of his previous salary.

When the marriage broke up – after the couple had two daughters – Granatino embarked on a four-year battle for a share of his estranged wife's fortune, claiming that he hadn't realised when they married how rich she was. He demanded £9.2m, but the Supreme Court ruled that he was entitled to just £70,000 a year until their younger daughter reached the age of 22.

The decision was in line with established practice in the USA and across Europe, where pre-nup agreements are recognised as legally binding, but is contrary to centuries of English law, which is predicated on the belief that marriage is for life and that the marriage vow "with all my earthly goods I thee endow" means what it says.

However, before the Supreme Court came into being, the House of Lords had taken a step in the same direction in December 2008, with the ruling in the case of a millionaire property developer, Roderick Macleod, who married a woman 22 years his junior. He persuaded her to sign a post-nuptial agreement under which she would get a lump sum of £1m plus maintenance for their children if they divorced. When the marriage broke up, she demanded £5.5m, but the law lords ruled that the original agreement should stick.

If, as expected, the Justice Department introduces legislation to make pre-nuptial agreements legally binding, they will face criticism for supposedly encouraging divorce instead of giving couples incentives to stay married.

Lawyers will usually charge around £5,000-£7,000 for drawing up a pre nup, making it unlikely that few but the very wealthy will want one.

But specialists in family law who have campaigned for years to get the law clarified say that it will avoid the kind of messy divorce that Sir Paul McCartney and Heather Mills underwent in 2008. He did not insist on either a pre-nuptial or post-nuptial agreement, an omission that he possibly regretted when she landed a £24.3m settlement.

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