Natasha Grande, co-founder and partner at specialist family law firm G&G Law, examines why pre-nuptial agreements become far more complex when clients have assets, residences or future plans across multiple jurisdictions.
Discussions with clients about pre-nups, can form an important part of wider long-term financial planning ahead of marriage. They are versatile documents, where both parties can set out how on divorce, the finances would be resolved, to provide certainty on the breakdown of a marriage. But when a pre-nup has an international angle, matters are more complicated.
With many people now living international lives, with assets in different countries, pre-nups can get more complicated. Many advisers will work with clients who live in one country for half the year and another country for the other half of the year. Some will also have clients who spend half their week in one country and half their week in another.
When you are advising about a pre-nuptial agreement for clients with this lifestyle, they should not be viewed as a one-off exercise that is swiftly completed before the marriage and then put in a drawer while both parties hope for the best.
When there is an international element, the issue of preparing a pre-nuptial agreement needs so much more due diligence. This is in order to ensure it is enforceable in the future, not just in terms of the financial provision, but so that the pre-nuptial agreement will be enforceable in any other jurisdictions that are in play.
Family lawyers and financial advisers have to consider for clients, whether a pre-nuptial agreement could need reviewing due to a change in circumstances and try to allow for that in the pre-nuptial agreement. When clients have international lives, sometimes they might move to a different jurisdiction in the future for a better lifestyle, a better tax regime, or for employment reasons.
To have a document that prepares for every eventuality is not realistic, and the document cannot allow for every jurisdiction that a party might live in in the future. As a result, clients should be advised that if they move to a different jurisdiction, at the time, that has not been considered in the pre-nup, i.e. they have not received advice on whether their pre-nup will be enforceable in that jurisdiction, they need to get advice in that jurisdiction.
It is not possible to prepare a pre-nuptial agreement which is enforceable worldwide. This is due to the great variety of differences in the regimes in different jurisdictions. In the US, the position on how the assets are divided is different from state to state. In Spain, France, Germany and Italy, parties can elect into different regimes on marriage. In some countries pre-nuptial agreements are enforceable and binding. In the UK they are not legally binding, but if certain safeguards are met in accordance with the Radmacher principles they are likely to be upheld.
It is not possible to have one agreement which will fit all countries. For example, if you had an English national, who was marrying somebody in Mexico, he may be based in Brazil, with assets in all different jurisdictions, you would have to consider the effect of the pre-nup in all of those jurisdictions where the assets were held, and ensure that it was compliant with English law requirements.
Equally, most financial advisers are extremely unlikely to be able to advise their clients on the legal and financial nuances of every jurisdiction in which their clients hold assets. As a result, it is important to ensure that specialist advice is obtained in each relevant jurisdiction where one or both parties have assets in order to take an informed view..
What should clients be advised to consider?
For financial advisers, it’s important that clients consider where they are getting married and, if they are choosing to elect into a property regime in that country, whether it is consistent with what they want in a pre-nuptial agreement. Clients should also be advised to consider whether their pre-nuptial agreement would be binding in that jurisdiction.
It is also worth considering that, in England, you cannot oust the jurisdiction of the court by signing a pre-nuptial agreement. However, it’s important to ensure that clients understand that they need to ensure the pre-nuptial agreement has been prepared in line with the Radmacher considerations to stand the best chance of the pre-nuptial agreement being upheld:
- Independent legal advice, of a similar nature.
- There has been financial disclosure.
- The terms of the pre-nuptial agreement are fair and provide provision for the parties needs to be met on the breakdown of a marriage.
- That either client when entering to the pre-nuptial agreement was not subjected to undue pressure, misrepresentation, or fraud.
- That the agreement is properly executed as a deed.
Below are some important cases which exemplify the importance of these Radmacher considerations:
EWHC 2920 Roberts J found that the wife did not understand the agreements intended effect on divorce, as there was no evidence that notary had advised the parties of the legal effect of the French contract.
In XW and XH 2017 EWFC 76 Baker J refused to hold the wife to the separation of goods regime that she had signed up to on her Italian marriage. Evidence was provided by Italian law experts who could not agree and could not assist the court on whether electing a separate property regime was an expressed or implied term that meant the parties agreed to be governed in their financial remedy by Italian law.
The point of this case was that the wife should have received advice from an English lawyer before agreeing to a separation of property regime. How could it be fair to conclude that the wife with no understanding of the Italian language understood the effects of the agreement?
Which jurisdiction?
When advising clients on electing their jurisdiction in a pre-nuptial agreement, financial advisers should encourage clients to take a holistic view of where they have the strongest links, and where they intend to live following the marriage. If the parties are domiciled somewhere else, or have significant assets elsewhere, it may be appropriate to give further consideration to the agreement.
What steps needs to be taken?
Financial advisers should note that, where a pre-nuptial agreement is prepared and signed in England but there are several other jurisdictions in play, it is generally advisable for clients to obtain specialist legal advice in each relevant jurisdiction. In many cases, advisers may wish to encourage clients to consider getting a “mirror” agreement drafted in those other jurisdictions, so that any agreement in another jurisdiction contains the same terms but is drafted in such a way that it is compliant with the legal requirements in that jurisdiction.
They should also understand that, where a client has already married and then moved to a different jurisdiction, it is worth considering whether a post-nuptial agreement should be prepared.
Conclusion
If you are acting for a client or you are a client looking for a pre-nuptial agreement, and there are multiple jurisdictions that are relevant, early advice is essential. That advice needs to be from a family lawyer who has got experience in dealing with international agreements, and most importantly, a black book of contacts of lawyers in the relevant jurisdictions.
