Most people have heard of pre-nuptial agreements due to their popularity among the rich and famous. In the same way a pre-nup safeguards the assets of each party by setting out exactly how the combined assets of the parties will be distributed in the event of a break-up, a post-nuptial agreement seeks to prevent some or all of each parties’ assets forming part of a financial claim on divorce.
Post-nuptial agreements are less common than pre-nups, but only because fewer people are aware of them. Just like pre-nuptial agreements, post-nups are part of a sensible financial planning strategy, especially if your circumstances change following your marriage.
We have helped people from all backgrounds secure their property and achieve greater peace of mind by advising them on a carefully drafted post-nuptial agreement. Talk to us to see if a post-nup is a sensible option in your circumstances.
Post-nuptial agreements are for anyone, especially if financial circumstances change following your marriage or civil partnership (one party receiving a large inheritance, for example). A post-nup is not just for wealthy individuals, or for couples on the brink of divorce. They are a sensible part of financial planning like making a will or taking out life insurance.
A post-nuptial agreement sets out how the assets of each partner in a marriage or civil partnership will be distributed if the relationship breaks down and the parties separate. The terms of a post-nup can be as detailed or as general as the parties choose – there is no set format or rules concerning what the agreement must contain.
Like a will, a post-nuptial agreement acts to avoid or reduce doubt or complexity about the intentions of the parties to the agreement. Entering into an agreement like this limits exposure to legal proceedings following separation, as well as reducing the stress of determining the split of assets after the relationship has broken down. A post-nuptial agreement is like taking out insurance against litigation.
No. The court has always retained a broad discretion to determine the distribution of assets on divorce . In 2010, the English Supreme Court confirmed that:
“The Court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.”
As such, there is a three-part test the courts use when considering a post-nuptial agreement:
The Supreme Court has provided guidance on what constitutes fairness in a post-nuptial agreement. If the court is satisfied this guidance has been followed, and the court could have reached the same agreement by following these principles, it is likely the agreement will be found to be fair.
Mostly importantly, it is unfair to fail to properly consider the needs of any children of the relationship. The court is also more likely to find an agreement is unfair the longer the marriage or civil partnership lasted following the signing of the agreement.
However, the court has confirmed it will respect the autonomy of adults entering into an agreement and there is nothing inherently unfair about protecting non-matrimonial assets.
Fairness is also to be considered based on three broad principles:
You do not need to be a solicitor to draft a post-nup. Like a will, there are no set rules or formalities which need to be followed. However, also like a will, we do recommend that any post-nuptial agreement is drafted by a lawyer.
This is because using a lawyer ensures your agreement does what you intend it to do. Family law is a technical and complex area, and post-nuptial agreements need to reflect the judgments of the court. There have been cases recently in which people have lost considerable portions of their wealth (up to 65%), which they believed they had protected, when a court ruled their agreement should not be upheld.
Whether your agreement is complex or straight-forward, we have the experience to provide first-class advice far cheaper than the cost of future litigation.
Without either a pre- or post-nuptial agreement in place, all the assets of both partners in the marriage or civil partnership can be categorised as matrimonial assets and can be included in the calculation of the financial settlement on divorce. As the starting point for the distribution of assets is they should be shared equally, assets owned prior to the marriage, or which came into one party’s sole ownership during the marriage, could be divided; depending on the circumstances, the final settlement could allocate more marital assets to one party than the other.
It is almost always easier, more amicable, and less expensive to agree the allocation of assets at a point before the marriage has broken down. Separation can be a stressful and painful time, and it can be difficult to agree what a fair and reasonable division of assets should be.
Anyone who does not already have an agreement in place setting out how they intend to distribute their assets in the event of a breakdown of their marriage or civil partnership would benefit from considering a post-nuptial agreement. You do not need to be hugely wealthy or to have complex financial affairs; in fact, many people with moderate assets seek advice about a post-nup for that very reason: it is important for them to secure significant property, items, or pots of cash.
Everyone’s circumstances are different, but a post-nuptial agreement could be worthwhile if one or both of you:
We have helped many people achieve greater security and peace of mind through a post-nuptial agreement. Speak to us today to see whether a post-nup would be appropriate for you.
You can agree to divide your assets in whichever way you choose, but it is important to remember that, even if you have a post-nuptial agreement in place, a court can still revisit the agreed settlement and decide that it is not fair and reasonable.
The judgment of the court will always come down to what is fair in the circumstances. If you have only been in a civil partnership or married a short time, it may be considered fair and reasonable to retain a large portion of your personal assets; if you have had a long marriage or civil partnership, perhaps including having children, it is more likely that the division of assets should be more equal. In either case, it is sensible to make clear in your post-nup that both parties agree they are being properly and adequately provided for by the agreed distribution of assets.
Sole ownership of property does not protect it from a claim as part of divorce proceedings. Each party to a marriage or civil partnership immediately becomes entitled to claim against the property of the other. A post-nuptial agreement can limit the claims that the parties are entitled to bring.
A trust can attempt to control what happens to property, but it is only one measure. The terms of the trust do not override the discretion of the court to distribute property fairly on separation, so circumstances may require the money in the trust to be shared.
A post-nuptial agreement complements the terms of a trust and adds further evidence that the property subject to the trust was intended by both parties to belong solely to one of them.
Not necessarily. The terms of a shareholder agreement will not stop a former partner making a successful claim for shares in the company if the court considers it is fair and reasonable in the circumstances.
Again, a post-nuptial agreement acts as additional evidence that the shares were not intended to be considered as matrimonial assets.
The English courts have confirmed they retain the authority to make decisions on matters relating to property owned overseas, even when the parties themselves have agreed that a foreign jurisdiction should govern their agreement. The Supreme Court has ruled that the English court is able to apply English law in such situations.
As such, it is arguably unnecessary to have different agreements to cover property overseas, or if one of the parties to the marriage or civil partnership is not a British citizen. As always though, the outcome will depend on the individual circumstances. We can advise on whether, in your situation, additional overseas agreements are sensible, taking advice, where necessary from a lawyer overseas.
In the same way that a will should be redrafted if things change in your personal or financial circumstances, arrangements for a financial claim set out in a post-nuptial agreement should be reconsidered if something occurs which alters the circumstances which existed when the agreement was signed.
The court will always consider the length of time that has passed since the agreement was entered into, particularly if anything has changed in the circumstances of either party, so it is sensible to review the terms of a post-nup periodically. We can advise you on the terms of your agreement and whether any changes are required.
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