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Needs Must: Will Prenups Make Divorces Less Fair?

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In the last decade or so, the divorce courts of England and Wales have won the reputation of being among the most 'wife-friendly' around.

A number of high-profile and high-value cases have highlighted a significant shift in how settlements were calculated.

Historically, the principal factor in dividing marital assets had involved meeting the needs of the financially weaker spouse. All that changed with a landmark ruling in 2000, in which a husband or wife's contribution to building a family or business was deemed to have impact on the outcome of who got what at the end of a marriage.

A couple of later judgements added to the momentum. In May 2006, law lords confirmed that Melissa Miller should be entitled to £5 million after a childless marriage of less than three years to her financier ex-husband Alan because she had a "reasonable expectation" of a future wealthy lifestyle.

Julia McFarlane, meanwhile, was awarded £250,000 annual maintenance for life because she had given up a high-earning career at the start of an 18-year marriage.

The underlying logic in those and many other cases was one of fairness.

It is perhaps ironic, then, to consider that 'fairness' may possibly be once more overtaken by 'need' thanks to a courtroom victory by another woman.

In 2010, Katrin Radmacher, a German heiress to an estimated £100 million fortune, successfully defended an attempt by her French former husband, Nicolas Granatino to win a share of her wealth.

Monsieur Granatino had tried to persuade the courts to discount a prenuptial agreement, signed before his nine-year marriage, in which he pledged not to make any financial claim in the event of them divorcing.

The decision of the Supreme Court in that case had more effect than merely heading off another multi-million pound post-marital settlement. It was, in domestic divorce law terms, something of a game-changer.

It did not in itself make prenups binding but meant they had more weight in helping determine the size of divorce settlements. A succession of subsequent cases has reinforced the potential for prenuptial agreements to overcome arguments that marital assets should be shared.

Such developments have been eagerly observed by the Law Commission. Prior to the Radmacher judgement, it had been considering whether to recommend prenups be given the full force of law.

The Commission's deliberations have taken another step forward with the launch of a further consultation about how divorcing couples divide their assets, including those acquired before they were married and by inheritance.

One possible recommendation which might follow is for Government ministers to make prenuptial agreements binding. Were that to happen, it could cement a key lesson from the Radmacher case: that spouses who signed properly drafted prenuptial agreements should abide by them, even if the split of their assets seem unfair.

Individuals, so the argument continues, should be held to a properly drafted prenup, as long as it met their needs and they had signed of their own volition with the time to take proper legal advice.

In less than two years since the Radmacher ruling, I and my colleagues at Pannone have seen a fourfold increase in the number of prenups being taken out.

If the Commission takes the step which many commentators believe it will following the consultation which it has just announced, I reckon it will fuel a continued increase in the popularity of prenups, especially among those seeking to protect their wealth and those embarking on second marriages.

It may not happen instantly, of course. One of the barriers to prenups becoming a normal element of domestic pre-marriage preparations is that British people generally appear more uncomfortable talking about their finances than those from other countries.

What it would provide, however, is more reassurance for brides or grooms-to-be anxious about the ability of divorce to unravel their finances.

With roughly 45 per cent of marriages in England and Wales likely to end in divorce, it's the sort of crumb of comfort which they may need before deciding whether to walk down the aisle after all.