The $15bn lawsuit launched by the ex-wife of a Russian oligarch highlights the need for prenuptial agreements.
If successful, Natalia Potanina’s case against Vladimir Potanin will be three times larger than the current record, despite Russia’s fourth richest man claiming he’s down to his last few millions.
Janice Leyland, Senior Associate Solicitor at Thursfields, said although such cases were extreme they were useful examples of the importance of prenuptial agreements (prenups) to the average man and woman.
Janice, who works from Thursfields’ Worcester office, said: “There’s much publicity regarding prenups entered into by the rich and famous. But with more people marrying later for socio-economic reasons, along with increasing divorce rates leading to second and even third marriages, prenups are definitely relevant to those with less deep pockets.”
A prenup is a pre-marriage legal agreement on how a couple intend assets to be divided if they separate or divorce, and can include financial arrangements during marriage.
Janice explained that such agreements can protect previously acquired wealth, non-matrimonial inheritance and family business interests.
She said: “A prenup gives certainty on who owns what. It can save money on costly litigation and minimise acrimony if a relationship fails. It’s also a great way of clarifying how finances are dealt with during marriage.”
Prenups are currently not legally binding, as UK courts still have the discretion to override them in divorce cases.
However, courts must consider the prenup as a ‘circumstance of the case’ along with all other factors set out in section 25 of the Matrimonial Causes Act 1973.
Janice further explained: “In 2010, the Supreme Court dealt with a landmark case Radmacher v Granatino concerning the issue of prenups. It ruled that as long as it’s freely entered into by both parties with full appreciation of implications, it should be held to it unless it would not be fair to do so.”
She said to be fair, prenups must be freely entered into “without any duress, fraud, misrepresentation or one party exerting their dominant position over the other”.
Fairness should also be based on housing and other financial needs, including earning capacities, ages, standards of living, health and children.
Janice said: “Other fairness factors include whether one party’s been able to pursue a career at the expense of the other, perhaps because of child care. And while there’s an expectation in a marriage that all assets are shared, prenups can protect assets brought into the marriage by one party which they wish to preserve as non-matrimonial property, as opposed to assets generated during the marriage.”
A draft bill published in 2014 by the Law Commission has proposed that prenups should be legally binding as long as they meet both parties’ financial needs and those of any children.
But Janice highlighted the need for proper legal advice, and added: “The draft bill insists prenups are contractually valid, are validly executed as deeds, and are not made within 28 days before a marriage. It also insists both parties were aware of all material information about the other party’s situation before signing the prenup, and that both parties received proper legal advice.”
For more details about prenups, call Janice Leyland on 01905 730450 or email her at email@example.com.