Couples joined by pre-nups still face uncertainty in absence of legislation

Lawyers are essentially being asked to advise clients on how a judge may view such a contract 10 or 20 years into the future

Prenuptial agreements in Ireland appear to be on the rise even though they still lack any legal footing and don't necessarily have a significant impact on separation proceedings.

It wasn’t so long ago that such contracts were deemed unconstitutional due to the absence of divorce, and while more people are using them today, uncertainty surrounding their effectiveness remains.

Family law practitioners will confide that rates are on the increase but because pre-nups are generally private and sensitive affairs, and because their integrity has never been formally tested before the courts, it is unclear exactly how many exist or crucially, what proportion of them have brought any influence to bear.

While there is not necessarily a culture of prenuptial arrangements in Ireland, things have been changing steadily since the introduction of divorce legislation in 1996. A common perception is that prenups are forced on love-struck couples by a worried business partners, or doubting family members.


Napkin pre-nup
Having greater stockpiles of personal wealth creates an added incentive for drawing up such agreements, which is perhaps why we often hear about them in relation to the stars, be it Tom Cruise and Katie Holmes; or Michael Douglas and Catherine Zeta Jones. Stephen Spielberg's divorce from Amy Irving in 1989 cost him nearly €60 million despite a judge controversially vacating a pre-nup written on a napkin.

“I think they are increasing [in Ireland] Because there is just that bit more of an awareness,” said Donagh McGowan, family law solicitor and partner at Mason, Hayes and Curran. “The vast majority is under the radar, so nobody can say for sure what’s happening. Certainly 10 years ago they were very rare. Anecdotally they are on the increase but it’s impossible to verify that. [It is] from a very low base. And they are certainly an exception.”

The latest Central Statistics Office figures, for 2011, record a total of 3,363 divorce applications, 2,819 of which were granted. For judicial separation applications, that picture was 1,391 and 1,049.

In 1997, the first year in which the legislation operated, there were 95 divorces granted, increasing to 1,421 in 1998 and peaking at 3,684 in 2007. Since then, and arguably influenced to some degree by the recession, the number has continued to fall to just 2,819 in 2011.

The Catholic lobbyist Iona Institute recently reported a 500 per cent increase in marriage breakdown since 1986, affecting almost a quarter of a million people.

McGowan does not believe, however, there is a direct relationship between breakdown rates and those who will seek to use a pre-nup as a financial failsafe.

“The driver of pre-nups is something that exists before someone enters into a marriage. They are trying to protect something and I don’t think there is a correlation with divorce rates.”

Historically there was never any point in having such a contract before divorce became possible – the legal position at that time was that such an agreement would be unconstitutional.

Current family law leaves it to the courts to decide “proper provision” of finances in cases that end up in court. Here, at best, a prenuptial agreement may be taken into account as one of a number of factors that might shape the terms of a court’s decision on division of interests. However a pre-nup has never been the focal point of a specific, individual legal challenge and so nobody can be sure exactly how each will affect an outcome.

“If you have a pre-nup and you are going through a separation, what is the court going to do with that agreement? The general view is there has been no decision on this,” explains McGowan.

In a recent article, family law expert Jennifer O’Brien noted: “It is likely that such an agreement would be considered together with the other factors contained in the legislation such as, the length of the marriage, the financial contributions made by both parties, the level of dependency, the number of children, work carried out within the home and elsewhere.”

Legislative footing
"As such, a prenuptial agreement is likely to be given more weight in respect of a shorter marriage with no children and less weight for a longer marriage, where there are dependents. An agreement also enables each party to set out clearly the financial resources brought by each individual person to the marriage."

In 2007, the Government set up a working group to examine the matter and it eventually reported that pre-nups should be given a legal footing in the divorce legislation to assist judges in the division of assets. But this has not yet been delivered.

“The report came and never really went anywhere; it just got shelved. That would just put in legislative footing what most family law lawyers believe will happen anyway,” says McGowan.

Last September, as part of its forthcoming legislation programme, the Government published details of its plan to address the subject. Referencing its Family Law Bill, the Department of Justice said: "It is intended that provision for pre-nuptial agreements, along the lines indicated in the Report of the Study Group on Pre-nuptial Agreements, may be made within that Bill in due course."

It also said the Bill would intend to make provision for pension adjustment in the context of separation agreements and certain other reforms of family law.

Despite the lack of a legal base, pre-nups can still be taken into account and so couples sometimes seek legal advice on how to approach them. The basics are easy enough: get independent advice; don’t do it any later than 28 days before the wedding and achieve full financial disclosure. Neither party should be under duress.

But, coming back to the lack of legal provision, lawyers are essentially being asked to advise clients on how a judge may view such a contract 10 or 20 years into the future. No mean feat.

“There is an always an element of coercion in these agreements,” says McGowan.

“Two people are in love, they want to get married and very often the need for the pre-nup is being driven maybe by parents or business partners who want that agreement to give them protection. It’s a very sensitive area.” Unlike in the US, he adds: “There certainly isn’t a culture here that ‘I will have decided what will happen to our money if we separate’.”