Why its better to be proactive than reactive

Why its better to be proactive than reactive

Radmacher v Granatino [2010] UKSC 42 was a landmark case that provides guidance on how much weight is given to a nuptial agreement in financial remedy proceedings following a domestic divorce.  A nuptial agreement is an agreement made before or during a marriage or civil partnership that seeks to do one or both of the following:

  • Regulate the couple’s financial affairs during the relationship.
  • Determine how their assets should be divided in the event of divorce, dissolution or separation.

In this case, Mr Granatino sought to challenge a pre-nuptial agreement entered into with Ms Radmacher, a wealthy German heiress, prior to their marriage.  The Supreme Court determined that it would not be unfair to hold Mr Granatino to the agreement’s terms.  As part of their judgment, the Supreme Court considered the weight that should be given to a nuptial agreement by a court when exercising its discretion under section 25 of the Matrimonial Causes Act 1973 (MCA 1973) and the majority held:

“The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to the agreement.” (At paragraph 75.)

The practical consequence of assets being divided according to an effective nuptial agreement, is its provisions being included in a final and binding consent order for a fraction of the cost of protracted litigation between the parties that can be both financially and emotionally draining.

As well as pre-nuptial and post nuptial agreements that are available to couples that are either planning to marry or enter into a civil partnership, there are ways that cohabiting couples can seek to proactively regulate their financial affairs during their relationship and determine how their assets should be divided in the event of separation.

According to the latest figures available from the Office for National Statistics, there were 19.4 million families in the UK in 2020, an increase of 7.4% over the decade. Whilst married or civil partner couple families are still the most common family type, people cohabiting as a couple but not married or civil partnered has increased to 5.1 million from just 2.8 million in 2002.  There remains, despite this increase, a lack of understanding amongst cohabiting couples about their rights during their relationship and on its breakdown, which is why couples may find it useful to take legal advice on options available to them, including declarations of trust and cohabitation agreements.  Whilst organisations such as Resolution continue to press for a change in the law, myths such as the “common law marriage” continue to persist, so co-habiting couples should establish what rights they do and don’t have.

In my practice, I frequently take instructions from clients in co-habitation disputes where they are attempting to agree with their ex, or soon to be ex-partner, on the extent of their interests in the property and what should happen next, issues that could have been avoided by a declaration of trust and/or a cohabitation agreement.  Like a nuptial agreement on divorce, embodying the terms of a co-habitation agreement in a separation agreement is likely to be much more cost effective and timely than lengthy and expensive litigation.

How can I help?

If you are a couple contemplating marriage or cohabitation or an individual considering gifting or contributing a sum of money to a family member towards a property purchase who may benefit from legal advice about seeking to protect that contribution, please contact me on 07869 811 686 for a free initial exploratory call.

Mike Davidson