Naomi Ireson, a Legal 500 recommended lawyer who specialises in contentious probate cases, looks at inheritance claims and pre-nuptial agreements.
With the increasing popularity of pre-nuptial agreements between couples before they marry it has become necessary to consider how these agreements impact the ability of a spouse to bring a claim under the Inheritance (Provision for Family & Dependants) Act 1975.
The courts’ approach to prenuptial agreements
Historically, pre-nuptial agreements were common in America but less so in England and Wales. Traditionally, in England and Wales, pre-nuptial agreements carried little weight in court. However, the case of Radmacher v Granatino began a change in the court’s view of pre-nuptial agreements in this jurisdiction. The case involved a husband and wife who entered into a pre-marital agreement (encouraged by the wife’s father) three months prior to their marriage. That agreement confirmed the party’s intention not to have any interest in or benefit from the property of the other in the event of a termination of their marriage.
Less than 10 years later, the parties divorced. The husband claimed against his wife’s assets on the basis that he had given up a successful and well-paid career in banking in order to undertake education at Oxford University. The first judge to hear his case adopted the view that whilst there was a pre-nuptial agreement, it would be unfair on the husband to uphold the agreement, particularly where two children had been born as a result of their marriage, and the husband did not receive independent legal advice prior to entering into the pre-nuptial agreement. The husband was given a housing fund of £2,500,000 and sufficient capital to receive an income in the region of £100,000 per year.
On appeal, the Court of Appeal held that the pre-nuptial agreement should have been a significant factor in the court’s determination of the husband’s claim for provision. The Court of Appeal awarded the husband provision that was limited to his role as a father and therefore based on the children’s needs, rather than his own.
Following a further appeal, the Supreme Court decided that the long held view that pre-nuptial agreements were contrary to public policy was now out of date. The Supreme Court also confirmed that a court can give effect to a pre-nuptial agreement, though ultimately the decision remains with the court. The Supreme Court reaffirmed the decision of the Court of Appeal that provision should be made for the husband only as a father.
The later case of Kremen v Agrest summarised the legal position:
- Pre-nuptial agreements must be freely entered into with a full understanding of the implications.
- There is no absolute requirement for the parties to receive full disclosure or independent legal advice, but the court will look at whether there was a material lack of disclosure of lack of advice received.
- The presence of duress, fraud or misrepresentation will undermine the effect of the pre-nuptial agreement.
- The court will look at whether “in the circumstances prevailing it would not be fair to uphold the parties to the agreement” which will further look at the following:
- The agreement cannot prejudice the children of the parties.
- The court will respect the decision of a married couple as to the agreement reached to protect their pre-nuptial marital properties.
- It is likely to be unfair to hold the parties to an agreement which leaves one spouse in severe financial need. However, the agreement can be interpreted as being the minimum amount required to keep the spouse from destitution.
The family courts now give significant weight to pre-nuptial agreements, often finding them to be a decisive factor. However, they are not binding in absolute terms if a fair result is not achieved by the agreement.
Inheritance claims and pre-nuptial agreements
There is yet to be a reported case under the Inheritance Act to determine the relevance of pre-nuptial agreements when a spouse seeks to go behind the agreement and claim financial provision from the estate of their late husband or wife.
Quite often, a pre-nuptial agreement will specifically exclude a spouse’s entitlement to bring a claim under the Inheritance Act, but can such a term be legally enforced where there is a question mark as to how much weight a court will give to a pre-nuptial agreement?
In the case of Hendry v Hendry & ors the claimant argued that a pre-nuptial agreement was not relevant to a claim under the Inheritance Act. The claimant was seeking to bring her claim out of time, and while the court did not need to determine the issue as to whether or not the pre-nuptial agreement was effective in that case, it is notable that the impact of the pre-nuptial agreement on the thinking of the court in this spousal claim case was recognised.
If you are a spouse who has entered into a pre-nuptial agreement which you consider to be unfair and are looking to bring a claim for provision under the Inheritance Act, or you simply require further guidance on inheritance claims and pre-nuptial agreements, contact our team on 0333 888 0409 or email us at [email protected]