What is a Pre-Nuptial Agreement?
A pre-nuptial agreement is an agreement entered into by a couple intending to marry, the name itself shows that it is important that the agreement is entered into pre-marriage
The agreement will set out how the parties will divide their assets and deal with their finances upon Divorce or Judicial Separation. With regard to “qualified” cohabiting couples cohabitation agreements afford the same protection where a couple separates or where one party dies.
Unlike the US, Canada, New Zealand and Australia, Ireland has no legislation which recognises pre-nuptial agreements. However, the cohabitation agreements, under the Civil Partnership Act 2010, may change the viewpoint on pre-nups.
Each situation is different and will vary according to the circumstances. In addition to property and assets, an agreement can deal with issues such as succession rights, children, custody access, maintenance, and pension. Due to the new Civil Partnership Act, unmarried farmers who are cohabiting could lose land and assets. The IFA is now seeking legal recognition of pre-nuptial agreements. It is now critical for everyone, not only farmers! to give consideration to a pre-nuptial agreement and the possibility of the effects of the Civil Partnership Act 2010.
A recent report on Post-Separation Parenting also recommends that pre-nuptial agreements should be commonplace where children are concerned avoiding future problems such as access during holidays, custody rights, and one parent remarrying and so on.
What are the usual scenarios when people enter into agreements?
Typically, I find that the people who want agreements are either one or both of the parties have been married previously and perhaps they have been through the courts on a contentious divorce- and they want to avoid this situation again.
In many of these situations the parties will be coming from to the marriage with children from their previous marriage and they want to ensure that their inheritance won’t be affected.
Another scenario, but one which is less frequent is one where one of the parties is coming into them marriage with substantial amount of assets, which far exceeded the assets which the other party has.
Why might couples do a pre-nuptial agreement?
The agreement can act as a peace of mind for the couple who is getting married; it can help take the pressure off the parties if they are to separate and can help in making one spouse commit to the contract of marriage with the knowledge that there is a contract in place in the event of separation
What are in these agreements?
- The length of the pre-marital contract;
- Percentage division of present and future property
- Succession Act rights
- Maintenance to be paid if the parties separate
- Lump sum payments
- How Pensions will be paid
- Custody or access for children
Are Pre-Nuptial agreements enforceable?
While an Irish couple is not prevented from signing a pre-nuptial agreement in Ireland, the Irish courts are not obliged to enforce such agreements if the couple’s relationship later breaks down.
It is a rather a grey area and it remains to be decided as to what impact these agreements have where the parties separate.
While these agreements are not illegal our constitution places great value on the institution of marriage, so some would argue that you cannot enter into an agreement which envisages the break up of the marriage as it is contrary to the whole concept of marriage. Essentially, by drawing up a pre-nuptial agreement a couple is preparing for the future break up before the marriage even begins!
The validity of Pre-Nuptial Agreements has never actually been tested before the Courts. However, this is all about to change with the Civil Partnership Act 2010 as unmarried couples can now enter into a cohabitation agreement so parties intending to marry may challenge their right to enter into a pre-nuptial agreement.
What is the main difference between a pre-nuptial agreement and a co-habitation agreement?
The main difference is that a pre-nuptial agreement is entered into pre-marriage and a cohabitation agreement is entered into by parties who are not married, don’t intend to marry, but are living together.
Can all Cohabiting Couples draw up a cohabitation agreement or are there conditions?
Anyone can enter into a cohabitation agreement. Under the provisions of the Act, a cohabiting couple must have lived together in an intimate and committed relationship for five years or two years if the parties have children together. Independent legal advice should be sought to ensure one party is not acting under duress.
Why do a pre-nuptial agreement?
The reason that many parties enter into a Pre-Nuptial Agreement is to try and avoid a dispute about the division of the assets, access to children etc., upon separation. It may not be strictly binding in Irish law but it may have an influence on the parties and any Court that has to decide any dispute.
However, a Study Group on pre-nuptial agreements was established by the then Minister for Justice, Equality and Law Reform, Michael McDowell, in December 2006. Their report stated that pre-nuptial agreements are enforceable and capable of variation under existing Irish statute law.
It also recommended that the weight to be attached to an agreement would be determined by the courts in the light of the requirement for proper provision and the relevant statutory criteria. So, if a pre- nuptial agreement is entered into and the parties separate and apply for a divorce and if under the terms of the pre- nuptial agreement one of the parties is not adequately provided for then the Court will vary the agreement.
These agreements can be of assistance in the breakdown of the marriage as they can be referred to and used as a guide for the distribution of the assets so long as the Judge considers that the agreement was made fairly and responsibly and the interests of both parties have been looked after.
It can also be argued that where parties sit down and agree what might happen if they separate that they are more likely to honour such agreements if the worst case scenario happens. Of course, the Courts are mandated to protect all of us and if such an agreement is blatantly unfair the Constitution says that they step will stop in and vary the terms?
Will Pre-Nuptial Agreements be formally recognised in the future?
Yes, I believe so. Public opinion is moving towards the acceptance that such agreements provide peace of mind and are of benefit to the parties when getting married. The report commissioned by the Government proposed that the existing legislation be amended and that prenuptial agreements be formally recognised for the first time.
The basis upon which they should be recognised is that the Judges would still be allowed to take into account any changes in the married couples circumstances where a prenuptial agreement exists. The court may look behind the agreement and may distribute the assets differently from what was proposed in the agreement.
While at present, the Irish courts do not recognize pre-nuptial agreements for married couples,following the Civil Partnership Act, cohabitation agreements are a possibility for unmarried couples who are cohabiting. Under the provisions of the Act, to be considered “qualified” a cohabiting couple must have lived together in an intimate and committed relationship for five years or two years if the parties have children together, It remains to be seen whether or not the Irish Courts find a way of getting around our Constitution or whether or not we, as a people, change the Constitution.
Is there anything you can do to make your agreement more enforceable?
Not really, but, this might help:
- Make full disclosure of your financial situations.
- Get independent legal advice about the agreement.
- Sign an acknowledgement that the agreement is intended to be legally binding.
- Agree to insert a provision that the agreement should have reviews after a birth of a child or a major increase in wealth.
- Agree to the percentage split of the assets, maintenance, custody in the event of the breakdown.
- State that the agreement is made in contemplation of what would be fair or what one party would receive in the event of the breakdown of the marriage.