Pre-Nuptial Agreements In The Court Of Protection

In a recent decision, the Court of Protection considered whether a Protected Party would enter into a pre-nuptial agreement, which is a contract agreed before marriage and designed to protect both parties’ personal assets in the event of a divorce.

However, it is not always clear whether protected parties (i.e. people who lack the capacity to make certain decisions, commonly referred to as the protected party) have the capacity to enter into contracts of this nature and incapacity is a ground upon which the validity of any contract may be challenged later.

It is important to remember that whilst the Court of Protection only has jurisdiction where the protected party lacks capacity in respect of certain decisions, it can also be called on to direct that the protected party’s capacity to make a specific decision should be assessed. Section 2 of the Mental Capacity Act 2005 sets out that a person lacks capacity in relation to a matter if at the material time they are unable to make a decision in relation to the matter because of an impairment of, or a disturbance in the functioning of, the mind or brain. The Act makes it clear that capacity shall be determined concerning a matter and therefore capacity is dependent on the decision in question.

It follows that a person who lacks the capacity to manage their property and financial affairs may not lack the capacity to marry. In these circumstances, it would be prudent for any deputy acting to consider whether a pre-nuptial agreement should be arranged as to best protect the party’s estate. This was considered in the case of PBM (by his litigation friend, The Official Solicitor) v TGT and another whereby the Court of Protection was required to rule on a Protected Party’s capacity to marry and enter into a pre-nuptial agreement.

PBM (by his litigation friend, The Official Solicitor) v TGT and another

Case background

In this case, the Protected Party had received a substantial settlement from the Criminal Injuries Compensation Authority (CICA) and a Deputy had been appointed as it was held the Protected Party lacked the capacity to manage his property and financial affairs. The Protected Party had been in a relationship with MVA and they intended to marry before the Deputy applied to the Court of Protection to determine whether the Protected Party retained the capacity to marry and also to enter into a pre-nuptial agreement.

Before the application, the Deputy had concealed the full extent of the Protected Party’s estate from the Protected Party as he was held to be financially vulnerable, indicating that the Protected Party may not be able to enter into a pre-nuptial agreement as he could not appreciate the level of his estate.

The Court’s decision

The Court held in this instance that the Protected Party did have capacity. The Protected Party had been provided with information relating to the extent of his estate and further, on understanding what the extent of his estate was, it followed that he had the capacity to enter into a pre-nuptial agreement.

This case further underlines the nuances of capacity – a person who lacks the capacity to manage his/her property and financial affairs may still retain the capacity to consider and enter into a stand-alone pre-nuptial agreement. The Court further noted the fact that a Deputy was in place, this would serve as a safeguard against the Protected Party being financially exploited. It is expected if the Protected Party was held to not have had the capacity to enter into a pre-nuptial agreement but to marry, the Deputy could have sought a pre-nuptial agreement with the Court’s approval.

Comment

This case may well set an interesting precedent and also would indicate that deputies can and should apply to Court for directions in circumstances where preventive steps might help protect the protected party’s assets.