Disadvantages of Pre Nupital Agreements

Disadvantages of a pre-nuptial agreement

The disadvantages to you of entering into a pre-nuptial agreement include:

• Not legally binding. A pre-nuptial agreement will not necessarily be binding, as currently the court remains able to make financial orders on the breakdown of a marriage. The court will uphold a pre-nuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances it would not be fair to uphold the agreement. Therefore, you could spend considerable time, money and effort negotiating the terms of the pre-nuptial agreement, but find it is not upheld by the court in any future divorce proceedings, though this will only happen if the court finds the agreement "unfair".

  
  

• Difficulties making financial provision for children. A court considering financial claims on divorce will primarily be concerned with ensuring any child of the family is financially secure. The court is likely to be sceptical that arrangements drawn up years previously will be in the best interests of the child(ren). If Parties wish to make provision for existing children in the pre-nuptial agreement, you can do so, but you must be aware that circumstances change and, for example, a child may have to retake a year at school. Making provision for future children is fraught with difficulties as the pre-nuptial agreement cannot predict future circumstances. Any clauses dealing with child maintenance will be subject to review if the other parent questions the adequacy of the arrangements because the jurisdiction of the Child Maintenance Service (CMS) cannot be ousted by agreement between the parents and a parent can apply to the CMS for a maintenance calculation at any time.

  
  

• Choice of law clause not effective. If you wish the court in England and Wales to deal with any future breakdown of your marriage, a clause in the pre-nuptial agreement stating that fact will not bind the English court. However, if pre-nuptial agreements are usually binding in another country, that will be a strong indication to the English court that Parties intend to be bound by the terms of the pre-nuptial agreement.

  
  

• Changes in circumstances. A pre-nuptial agreement cannot predict what will happen during the marriage and significant changes in circumstances may occur. For example, Parties may have a further child, lose a job or become incapacitated. Should circumstances change, a pre-nuptial agreement that does not cover the changes will lose its relevance and is unlikely to be upheld by the court.

  
  

• Review. To increase the likelihood of a court upholding the terms of the pre-nuptial agreement on the breakdown of the marriage, there should be a review clause that triggers a review of the terms on a significant change in circumstances, such as the birth of a child or bankruptcy. A review of the pre-nuptial agreement will result in further time, legal fees and perhaps difficulties agreeing any changes that should be made to the agreement. As a review is likely to be made when there has been a significant change in circumstances, the timing of renegotiating the terms of the agreement may be awkward.

  
  

• Unromantic. Parties may find the concept of a pre-nuptial agreement setting out what will happen to your finances should your relationship fail rather unromantic at a time when you are in love and planning your wedding.

  
  

• Bad timing. Preparing for a marriage is stressful, and the added pressure of considering financial issues and negotiating the terms of a pre-nuptial agreement can put strain on a relationship.

  
  

• Vulnerability of economically weaker party. Sometimes the economically weaker party wants to agree to clauses limiting his or her rights simply to get the pre-nuptial agreement finished so he or she can concentrate on the wedding. To ensure the pre-nuptial agreement is fair to both parties and has the best possible chance of being upheld by the court, you must both be aware of the implications of each clause and whether it is of benefit to you. I will advise you accordingly and the other party should also receive legal advice, but only Parties can decide how you wish to proceed having had the benefit of legal advice.

  
  

• Can cause family upset. A request for a pre-nuptial agreement may upset wider family members, such as parents, who may feel affronted and perceive the agreement as a reflection of a lesser social status or an implication that their son or daughter is seeking material advantage from the marriage. This can put strain on family relationships.

  
  

• Parental influence. Sometimes the parents of the economically stronger party drive the pre-nuptial agreement. A pre-nuptial agreement can end up reflecting the parents' wishes rather than those of the couple. This must not happen. You are my client and the pre-nuptial agreement must reflect the wishes of Parties.

  
  

• Inheritance issues. If a party waives inheritance rights in the pre-nuptial agreement and his or her spouse dies while they are still married (and did not provide properly for the other in a will) he or she may be in a precarious financial position. I advise that neither Party should waive your inheritance rights as this would likely result in the court considering the agreement unfair.

  
  

• Legal fees. A pre-nuptial agreement can save a significant amount of money if there are later divorce and financial proceedings, but if the marriage survives, the legal fees spent in drafting and negotiating the terms of the pre-nuptial agreement will effectively have been wasted.