To pre or not to pre …

News Source : http://www.osbornes.net

The question “should I get a pre-nup?” is one that has caused suffering to the minds of many a matrimonial lawyer. The issue of the importance of pre nuptial agreements has again been considered by the Courts in England. In July of this year the Court of Appeal was asked to consider the case of Radmacher v Granatino. This is the latest of a number of recent cases (such as Crossley v Crossley and MacLeod v MacLeod) where Judges have considered the impact of pre nuptial agreements on divorces. The Court in Radmacher v Granatino was persuaded that the pre-nuptial agreement should have a significant bearing on the order made. The position, although still not altogether clear, is now that if the pre-nuptial agreement was made fairly and without breaching the UK’s laws regarding contract then it will have a significant effect on any final order.

Unlike in many other countries, the position in England in relation to pre nuptial agreements has been one of uncertainty. There has not been (and there still is not) a law saying that if you enter into a pre nuptial agreement then this agreement will be upheld. Traditionally the English Courts have looked at pre nuptial agreements with a degree of scepticism, perhaps at best it could be seen as one of many factors to be taken into account. In the past this has left matrimonial lawyers scratching their heads when asked “should I get a pre-nup?”. The rather unsatisfactory answer was that that you could enter into a pre-nup but it may or may not be upheld and it may or may not have any impact in a future divorce settlement. Perhaps the lawyers were then able to advise that if you both fully disclose your financial positions, obtain legal advice and as long as there is no big change in circumstances (such as the birth of children) then maybe the Court will be persuaded to make an order in the terms of the pre-nuptial agreement.

So has the answer changed now that we have the Court of Appeal’s guidance in Radmacher v Granatino? In one sense the simple answer is no. There is no statutory basis for pre nuptial agreements being considered binding contractual agreements and the Court at any level cannot change this. Ultimately, only parliament can address the issue of whether or not and in what circumstances pre nuptial agreements should be held to be binding. Whilst the Law Commission is now going to investigate this issue, the reform of matrimonial law is a political hot potato and neither of the major political parties have demontrated a real willingness to consider change. As Lord Justice Thorpe in Radmacher v Granatino himself notes, “In February 1998 the Solicitor General announced that the government intended to reform the law of ancillary relief as a matter of urgency to achieve greater certainty and predictability of outcome … The government however, retreated without further explanation from its earlier stated intention and experts were left to contemplate a future without legislative reform.” Further legislative reform may be perchance only a dream.

However, this is a rather simplified way to look at matters. The reality is that the Court decisions have shown an increasing support for pre nuptial agreements. For example, in Radmacher v Granatino there was a big change in circumstances in that two children were born during the marriage. This did not prevent the Court from being influenced by the terms of the pre-nuptial agreement, as the birth of children was forseeable. Whilst the Court cannot find that the pre nuptial agreements are binding, they are becoming more and more persuasive.

In the Radmacher v Granatino case there were complexities. Neither of the parties were English and the pre-nuptial agreement was reached in Germany (and in what seems an attempt to complicate matters further, the marriage was celebrated in the UK and Switzerland and the parties then lived in London and New York). As with most of the matrimonial cases considered by the higher courts the family was very wealthy and the husband and wife both had very different stories as to why they entered into the agreement. Although it is very unlikely that these particular circumstances are going to be repeated, the case should not be dismissed as a one off. Whilst the international elements were important factors in the Court’s reasoning, the conclusion that the Court reached was that the Court should take into account the

“marital property regime into which the parties freely entered”.

Now if the agreement were reached in England then by implication the laws about written agreements should also be taken into account. This implication was further reinforced the Court’s consideration of the difference between pre-nuptial agreements and post-nuptial agreements. Post-nuptial agreements do have some legal standing and there is significant and long standing case law upholding their persuasive value. The Court in Radmacher v Granatino, in an clear move away from the findings in the earlier Isle of Man case of MacLeod v Macleod (decided by the Privy Council, the House of Lords under a different guise), felt that there was little in reality to distinguish a pre-nuptial agreement from a post-nuptial agreement.

So we can see that the Radmacher v Granatino case has implications wider than the the very narrow set of facts in that case. There was not, and could not, be a deviation from the rules under which the Court must consider applications for ancillary relief and the Court of Appeal considered the factors listed in section 25 of the Matrimonial Causes Act and applied those factors in the Radmacher v Granatino case. The Court is not asked to consider these factors, it is specifically told that it has a “duty … to have regard to all of the circumstances of the case”. There is no doubt now that the Court considers that it has a duty to have regard to the terms of a pre-nuptial agreement and furthermore that it should take into account that the agreement was a freely entered into written agreement (assuming of course that this is not in dispute).

The Court of Appeal was strongly influenced by the terms of the pre-nuptial agreement in Radmacher v Granatino, to the extent that whilst the other section 25 factors were taken into account, the consideration of the husband’s financial circumstances and future financial circumstances appeared to be more on the basis of his role as a father than his role as a husband. The pre-nuptial agreement was of great persuasive value to the Court, and this was despite the issues surrounding the making of the agreement (such as the husband not having sought legal advice in relation to the terms of the agreement).

The case of Radmacher v Granatino has shown that the Courts will take into account the terms of a pre-nuptial agreement and furthermore that they can find these agreements very persuasive in making final orders regarding financial disputes. Whether or not the Law Commission will recommend change and parliament will effect change remains to be seen. However, the decision in Radmacher v Granatino does now change the reply to the original question. In many circumstances it may now be time to take arms against a sea of troubles through a pre nuptial agreement.

Of course, a pre-nuptial agreement may not be for everyone. The other factors in section 25 of the matrimonial causes act are all also to be taken into account in the division of the matrimonial finances and the first consideration is still the welfare of any child of the family. It is hard to envisage how this would change even if legislative reform does eventually happen. A pre-nuptial agreement is certainly something that should be considered carefully when there is a possibility that any future financial dispute will not be resolved solely on the basis of needs. What can be advised with more confidence than previously is that if a fair and reasonable pre-nuptial agreement is reached, without breaching the laws of the country in which the agreement is made, and the implementation of the agremeent would not impact upon the welfare of any children then it is now likely that the Court will uphold the agreement and make an order in similar terms.

So whether” to pre or not to pre” remains a question for the individual, but entering into such an agreement now provides more certainty than had previously been the case. It is now much more likely that a pre nuptial agreement will persuade a Court to make an order in those terms and it will almost certainly have some effect on the Court’s decision.

FYI – Top 10 Divorce Settlements

news source : Telegraph.co.uk

Here is a list of what is thought to be the highest divorce settlements

In 1994, Neil Diamond and Marcia Murphy separated Photo: AP

According to Russian news sources, Irina Abramovich settled for $300m (£155m) Photo: GETTY

 

1. Rupert and Anna Murdoch – $1.7 billion

Rupert married Anna in the 1960s, with the pair remaining together for 32 years, having three children. They split amicably in 1998. The divorce was finalized in June 1999 when he agreed to let her leave with $1.7 billion. 17 days later he married Wendi Deng.

 

2. Adnan and Soraya Khashoggi – $874 million

Saudi businessman Adnan made his money as an international arms dealer for the Saudi royal family. He then launched his company Triad, based in Switzerland, owning banks hotels and real estate across the world. He married Soraya in 1961. Their 1982 divorce resulted in an estimated $874 million settlement.

 

3. Craig and Wendy McCaw – $460 million

Craig made his money turning a failing TV cable service into a successful business, eventually selling for $755 million. In 1981 he then acquired cellular phone licenses, eventually selling to phone company AT&T for approximately $12 billion, becoming its largest single shareholder.

The pair met at Stanford University when she tutored him, with them marrying in 1974. In 1995 divorce proceedings were initiated with Wendy wanting her share to support a $200,000 a month lifestyle.

 

4. Roman and Irina Abramovich – $300 million

It had been speculated that the settlement could have left her the world’s richest ever divorcee. But according to Russian news sources, Mrs Abramovich settled for $300m (£155m). The figure included the value of homes in Britain and Moscow, as well as a yacht and private plane. At one point it was thought he would have to pay a settlement of at least $1 billion.

 

5. Michael and Maya Polsky – $184 million

According to court records, the couple married in the Ukraine in 1975, coming to the US in 1976 with “only four suitcases and $500 in cash. After sighting irreconcilable difference in 2003, Maya Polsky filed for divorce from energy magnate Michael Polsky. In October 2006 a Chicago judge said Mrs Polsky was entitled to at least half of the couple’s assets.

 

6. John ‘Jack’ Welch and Jane Beasley – $180 million

Welch is the former Chairman and CEO of General Electric, the technology and service conglomerate in New York, now ranked as the world’s largest company. The couple married in April 1989, divorcing in 2003. While Welch had reportedly written a prenuptial agreement, there was a 10-year time limit. Beasley reportedly left with amount to be in the range of $180 million.

 

7. Michael and Juanita Jordan – $168million

The most expensive celebrity divorce in history. The former Chicago Bulls basketball superstar married Juanita Vanoy in 1989. They divorced in 2007. It is thought negotiations between the couple added £20 million to the final deal from an initial settlement. The marriage had shown signs of trouble in the past with Juanita filing for divorce in 2002, although they announced a reconciliation.

 

8. Neil Diamond and Marcia Murphey – $150 million

When Diamond met Marcia Murphey, he was already married to his first wife. In 1994, they separated, she citing “irreconcilable difference”. The singer claims he willingly gave her the money.

 

9. Steven Spielberg and Amy Irving – $100 million

Amy Irving shot to fame in 1976 when she played the lone teen survivor in Carrie. Spielberg began to make a name for himself in Hollywood, following Jaws. The pair married in 1985, but the pair broke up four years later. He gave Irving, the mother of their son Max $100 million.

 

10. John and Beverly Charman – $95 million

The pair met in 1969 at school. When they married in 1976 neither had significant resources. In November 2003, Mr Charman, nicknamed “King of the London Insurance Market”, told his wife he was setting up residence in Bermuda and their marriage was over. He initially offered her £6 million cash, but she argued that the sum was not enough. The judge decreed a fair settlement would involve him giving 37 per cent of his assets. Mr Charman had a subsequent appeal dismissed. It is thought to be Britain’s highest divorce settlement.

Pre-nuptial agreements given recognition in English law!

News Source : telegraph

Pre-nuptial agreements were given significant recognition in English law for the first time yesterday after a wealthy German heiress won a landmark legal battle with her former husband. 

Three Appeal Court judges ruled that the assets of Katrin Radmacher – a paper industry heiress said to be worth £100 million – should be protected from her French ex-husband because of the pre-nuptial contract they signed before they married.

They said that in future cases, judges deciding the division of marriage assets should give “due weight” to pre-nuptial contracts freely entered into by the parties.

In what one divorce solicitor described as a judgment that was “hell-bent” on enshrining pre-nups in law, the judges even suggested the agreements could be an alternative to the “stress, anxieties and expense” of divorce hearings in the courts.

Miss Radmacher, 39, had brought her case to Court of Appeal to challenge an earlier ruling in the High Court that she should give £5.85 million to Nicolas Granatino, despite him having signed a contract vowing never to make claims on her if they split up.

That ruling had been made by Mrs Justice Baron, in the Family Division, who had said it would be “manifestly unfair” to hold Mr Granatino to the pre-nuptial contract as such agreements had never been legally binding in this country.

Although the agreement was signed in Germany, the couple married in London in 1998 which was why the case was being heard in England.

The couple lived together in the UK and in New York before the marriage broke down in 2003 when Mr Granatino, 37, left his well-paid banking job to become a £30,000-a-year biotechnology researcher at Oxford University. They divorced in 2006.

In yesterday’s landmark ruling, Mr Granatino’s settlement was cut to about £1 million as a lump sum in lieu of maintenance, with a fund of £2.5 million for a house which will be returned to Miss Radmacher when the youngest of their two daughters, who is six, reaches 22.

His debts of about £700,000 are to be paid off by the heiress, who had always agreed to this settlement.

But the ruling made clear the court was awarding the money for the children – which the pre-nup always stated fell outside its remit.

Lord Justice Thorpe, sitting with Lord Justice Rix and Lord Justice Wilson, said that in any future cases, judges should give “due weight” to pre-nuptial contracts freely entered into.

He said: “In so far as the rule that such contracts are void survives, it seems to me to be increasingly unrealistic.

“It reflects the laws and morals of earlier generations. It does not sufficiently recognise the rights of autonomous adults to govern their future financial relationship by agreement in an age when marriage is not generally regarded as a sacrament and divorce is a statistical commonplace.”

The wording suggests the judges were persuaded by barrister Richard Todd, for Miss Radmacher, who in April argued that the freedom to agree a contract was “at the heart of all modern commercial and legal systems”.

Lord Justice Thorpe stressed that “a carefully fashioned contract should be available as an alternative to the stress, anxieties and expense of a submission to the width of the judicial discretion.”

Emphasising how English matrimonial law was out-of-step with Europe, he also said courts here were “in danger of isolation” on the issue. In France or Germany, Mr Granatino would have been awarded nothing because of the pre-nuptial contract.

The contracts are still not binding under English law, as there is no provision for them under Section 25 of the 1973 Matrimonial Causes Act.

In the 47-page judgment, Lord Justice Rix called for Parliament to clarify the law on them, saying he could see “great force” in the argument that they be treated as “presumptively valid”.

The Law Commission is due to report on the matter by 2012 and draft legislation is expected to follow.

David Lister, a partner in matrimonial law at solicitors Mischon de Reya, said it was the most important ruling on pre-nups to date because the judges made clear they wanted it applied across the board.

“They appear to be hell-bent on creating a judgment that says ‘Please take pre-nups more seriously,” he said.

“It is saying they are more likely to be binding then they were before.”

Vanessa Lloyd Platt, another leading divorce lawyer, warned that those who signed pre-nups thinking they were worthless would now be making “a seriously flawed move”.

Although it would take an act of Parliament to “enshrine” them in law, she said the judgment had “effectively created a situation where that is the case”.

“This will open the floodgates for people asking for pre-nups,” she said, noting: “It’s not just the wealthy, it’s filtered down to the middle classes.”

“Lawyers will be advising, ‘It’s better to have one that not.’ ”

In a statement outside court, Miss Radmacher said: “I am delighted that the court accepts that the agreement Nicolas and I entered into as intelligent adults before our marriage should be honoured.

More couples turning to ‘postnup’ deals

A prenuptial agreement is a written agreement made by a couple who intend to get married, which sets out what should happen to their finances in the event of the breakdown of the marriage. A prenuptial agreement is also known as a premarital agreement.

With the legal status of Pre-nuptial agreements in England and Wales mired in controversy, wealthy couples are increasingly turning to postnuptial agreements – entered into after a marriage – to govern how their assets should be divided in the event of a divorce.

Last year, five senior judges sitting in the UK Privy Council backed the enforceability of the deals in the closely followed case of Macleod v Macleod.

While still a relatively new concept, “postnups” are often used in cases where a couple’s wealth has increased dramatically during the course of their marriage or when a relationship starts to falter but both parties want to try to make it work.

They also offer significant tax planning advantages, especially when wealth is being shifted from one generation to the next, says Jeffrey Nedas, a forensic matrimonial accountant.

With the credit crunch in effect forcing some husbands and wives to stay together, lawyers say that postnuptial deals allow couples to agree the outlines of a settlement while they wait for the economy to recover.

Is divorce going out of fashion?

ACCORDING TO THE LATEST FIGURES released by the Office for National Statistics, there were 144,220 divorces in the UK in 2007, 2.6% fewer than the previous year. This actually represents a 20% drop from the highest level in 1993.

At this time, we are seeing a rise in the number of so-called “City divorces”. The credit crunch inevitably puts a strain on marriage and wives are deciding to divorce before the generous bonuses of recent years become a thing of the past. Many husbands in the City who come to see us have often felt unsupported at home, particularly during a time of considerable pressure and uncertainty in the workplace; the added financial worries of school fees, hefty mortgages, credit card debts, etc. exacerbate the situation. There is no magic formula for a successful marriage but a key component is to maintain good levels of communication throughout these stressful times.

There are of course fewer marriages than in the past and people are marrying later in life. Indeed, many couples choose not to marry at all. As a specialist Family Law Practice, we offer a variety of solutions to our clients’ relationship matters, such as Cohabitation Agreements, Pre-Nuptial and Post-Nuptial Agreements, Declarations of Trust and we undertake Mediation.

If a relationship ends and a couple decides to separate, there are various methods by which agreements concerning the family finances and contact with any children can be reached; it does not automatically mean that matters will end up in Court. Recourse to the courts is the most costly solution in time, money, stress and the irreparable damage to family relationships. Negotiations can take place between solicitors without any involvement of the Court and we are able to draft a Court Order, which will be placed before a Judge reflecting the agreement reached and without the need for either party to attend in person.

Of course, there are instances where a firm hand is needed and Court proceedings are the only option. We are able to offer our own Advocacy Services to our clients, where appropriate, to save costs. Where it is necessary to instruct Counsel, we use the Leading Chambers in the country.

If your relationship has ended, the most important step is to seek advice early to enable you to assess your options. Instruct a solicitor in whom you have complete confidence and with whom you can confide, but also whose judgement you trust and who is technically able. All the Family Lawyers at Osbornes are members of Resolution. Lisa Pepper is an Associate at Osbornes. She is a member of Resolution which is an organisation of 4,700 lawyers and family justice professionals who believe in a constructive, non confrontational approach to family law matters. Lisa is a regular speaker at the London College of Law and will shortly qualify as a Collaborative Lawyer. She can be contacted on 020 7485 8811 or by email: lisapepper@osbornes.net.