The break-up of a marriage may have devastating consequences for all parties both emotionally and financially.

The Irish Courts have a constitutional obligation to ensure that “proper provision” is made for both spouses and any dependent children.

Judges have wide discretion and can make any orders that the Court feels appropriate in order to ensure that this objective is achieved.

Unfortunately in certain scenarios this can have a catastrophic impact on family businesses. To achieve “proper provision” for a spouse and/or dependent children, the sale of assets may be ordered so as to raise capital.

A pre-nuptial agreement is essentially a deal between the parties to regulate rights and obligations arising from marriage and is used to ring-fence assets in the event of a marital breakdown.

These clients who enter into pre-nuptial agreements are not simply confined to the rich and famous but may be people embarking on a second marriage who wish to protect assets for any children from the first marriage, people engaged in family businesses such as farming and people who wish to preserve wealth accumulated prior to marriage.

Currently, pre-nuptial agreements are not strictly enforceable but may be of persuasive value to courts in determining what is proper provision.

However, there is an urgent need for the Government to place pre-nuptial agreements on a legislative footing.

There are a number of important steps that must be taken to ensure that the pre-nuptial agreement will be considered by a court.

For such an agreement to carry weight, the non-owning spouse must have legal advice on the implications of the agreement.

Furthermore, there must be financial disclosure between the parties, preferably by way of exchange of Affidavits of Means detailing assets, income, liabilities, expenditure and pension entitlements.

A pre-nuptial agreement should be signed a minimum of 28 days prior to the wedding to ensure that neither party can claim duress or undue influence due to the proximity in time of the marriage.

Currently, a pre-nuptial agreement will, at the very least, provide an indication as to the intention of the parties prior to the marriage and in cases of short marriages may be of considerable assistance to the court.

Pre-nuptial agreements were given recognition in the UK by virtue of a landmark ruling of the Supreme Court in relation to the Katrin Radmacher case in 2010.

Katrin was a German heiress who sought to protect her £106m estate. A prenuptial agreement was signed by her husband in 1998 that stated neither party would benefit financially on the breakdown of the marriage. The Supreme Court indicated that it would be natural to infer that parties entering into agreements will intend that effect be given to them.

A recent case in 2014 in the UK however overturned the existing prenuptial agreement. The “Bob The Builder” case involved the daughter of a director of a media company who created the children’s TV character. He made a gift of a property to his daughter following the implementation of three pre-nuptial agreements that provided that the son-in-law Frankie Limata would not make any claim against family assets.

Nonetheless, a High Court award of £1.2m was given to Mr Limata. The court did indicate, however, that without a pre-nuptial agreement in place, Mr Limata would have received a far larger settlement.

While a pre-nuptial agreement may not be fully enforced by a court, it is preferable to have the benefit and protection of such an agreement as a starting point in a Judicial Separation or divorce application.

For any agreement to stand up to scrutiny by the courts, it must be fair to both parties and the formalities must be closely observed.

As Katrin Radmacher said: “Some people think of pre-nuptial agreements as being unromantic, but for us it was meant to be a way of proving you are marrying only for love”.

Annette Sheehan is a family Law solicitor with FitzGerald Solicitors in Cork.

This is a copy of an article which appeared in the Irish Independent on Saturday April 25th 2015.

Leave a reply