William
Longrigg, family partner at Charles Russell, discusses current prenup
thinking in relation to the impending divorce of media magnate Rupert
Murdoch, who and Wendi Deng.

Rupert Murdoch has spent a great deal of his 82 years as a married
man. His first marriage lasted 11 years, his second 32 and his third
14.  He also knows about divorce. 

Reportedly, his second divorce cost him $1.7 billion – an amount which is eye-watering even by US standards.  

It is therefore not surprising that he apparently entered into a
prenup when he married Wendi Deng in 1999; 38 years his junior and
already divorced herself, statistically a divorce was always more than a
distant possibility.  You don’t have to be a cynic to think that a
prenup is a good idea in those circumstances.

Reportedly, amendments were made to the prenup during the marriage
(although details are not publicly known). It is highly likely that all
financial issues will be settled between lawyers and there will
presumably be a confidentiality agreement to ensure minimal publicity.  

In the UK, prenups have taken on a new status in England and Wales over the past few years. The 2010 case of Radmacher v Granatino
gave the Supreme Court an opportunity to tell us all that they would
uphold prenuptial (and, indeed, post-nuptial) agreements if they were
arrived at without too much pressure, ideally with the benefit of
financial disclosure, with legal advice on each side and if they
provided for the needs of the financially weaker party.  The legal cases
since Radmacher have dealt principally with what the English courts do
where there is a foreign prenup rather than how they interpret an
English one, so most lawyers would still prefer legislation on the
matter for the sake of clarity.

US proceedings

Of course the US has been way ahead of the UK on this and the Murdoch
divorce is happening in New York.  Bearing in mind that there were
likely to be children and that there was likely to be a significant
increase in the value of his assets during the course of the marriage
(both happened), Wendi Deng’s potential claim against Murdoch is vast.  
Without a prenup, the starting point might easily have been 50 per cent
of the increase in value of the overall assets during the marriage.  
Reportedly, his fortune is around $11 billion.

A question often arises on the drafting of prenups whether there
should be a review clause - in other words whether there should be an
agreement that the prenup will be looked at again during the marriage
and, potentially, amended.   Bearing in mind that prenups are normally
agreed and drafted on the basis that without them the marriage would not
take place, it is often difficult to see the value of a review clause
where the threat of “if you don’t agree to this, I will divorce you”
might be interpreted as “undue pressure” which could potentially weaken
any agreement reached post marriage.  

It is not that unusual for people to change the terms of their
prenups even without a review clause, sometimes when things are looking
difficult between them, but sometimes when their circumstances change,
such as the birth of a child or a significant change in their finances.
Sometimes the arrangements arrived at in the prenup simply become
redundant after the marriage has lasted a certain length and perhaps the
couple are ready to do away with it altogether, or to amend it to make
it more relevant.  

One of the matters that lawyers are very keen on is to ensure that
any prenup makes it clear that, if amendments are to be made or if
different provision is to be suggested by either party to the marriage,
those amendments need to be made with the same formality as the written
prenup.

Too often there is the scope on divorce to argue about conversations
that have been had, or even emails sent in the heat of the moment, that
are provided as evidence of the adjustments to an agreement being sought
by one party or another.

Certainty, clarity, confidentiality

The main point behind a prenup, apart from in most cases saving money
for the financially better-off party, is that they provide clarity - or
even certainly - in the event of a breakdown of the marriage.   Whether
the divorce happens in New York or in England, the potential for a
long, drawn-out process where there is a lot of money, where there are
offshore trusts, where there are complicated company structures and
competing interests, is huge.   At the age of 82, Murdoch will not
wish to have a protracted legal fight for his third divorce,
particularly as he has had to deal with a lot of other litigation in
recent times. 

Whatever the details of this particular prenuptial agreement and
indeed any amendments that were made to it during the marriage, the
message we have from the experiences of other divorcees is that the
benefits of comparative certainty of outcome and a high degree of
confidentiality (where that is a potential issue) make the effort of
producing a properly thought-through prenup at the time of the marriage
very sensible indeed. This is particularly true for older people on
their second and third marriages where they are already financially
established.

Paul McCartney might have done very well to consider that when he married Heather Mills.