A postnuptial agreement, or as it’s sometimes known, a post-marital agreement, is a legally binding contract that couples enter into after marriage or entering a civil partnership. This contract has striking similarities to the more widely recognised prenuptial agreement and outlines the division of assets and liabilities should the marriage or civil partnership come to an untimely end. In this comprehensive guide, we will delve deeply into every facet of post-nuptial agreements—what they are, why they are important and their legality in the context of UK law. Additionally, we will provide guidance on how you can go about forming your own post-nuptial agreement.
Understanding Postnuptial Agreements
Postnuptial agreements hold significant importance when there is a substantial change in either partner’s financial status during the course of their marriage. These changes could be anything from one partner inheriting a large sum of wealth, for instance through inheritance, or one partner launching or selling a successful business. The core objective of such an arrangement is to safeguard both parties from potential disputes arising due to separation or divorce.
The Functionality and Purpose of Post-Nuptials
Just like prenups, these agreements aren’t designed to sow seeds of mistrust between spouses but rather serve as prudent financial planning tools. They essentially function as insurance policies for marriages—nobody wants to think about their marriage failing; however, if things do not work out down the line, having a post-nup can make proceedings less stressful and more straightforward.
Legality Of Postnuptial Agreements In The UK
Until recently in England and Wales’ legal history, both pre- and post-nuptial agreements did not hold any legal force. However, the game-changing Supreme Court decision of Radmacher v Granatino in 2010 turned this around. Since then, courts have placed increasing value on these documents, provided they are entered into willingly by each party with a full understanding of its implications, unless doing so would result in an unfair outcome.
Scotland, on the other hand, has acknowledged pre- and postnuptial contracts as legally enforceable under Scottish matrimonial law for years now, subject again to considerations of fairness at the time agreements take effect. English law is continuously evolving its stance towards these arrangements, often giving more credence to them.
Formulating Your Postnuptial Agreement
1. Seek Legal Advice
Both parties should seek independent legal advice before signing any type of nuptial agreement. This measure ensures that each individual is fully aware of the implications associated with signing such a document.
2. Full Financial Disclosure
To deem a postnuptial agreement valid, it is vital for both parties to provide full financial disclosure. This procedure involves revealing your entire financial status, including assets, income, liabilities and expectations of future capital or income (like inheritances).
3. Fairness & Reasonableness
The terms outlined in the postnuptial agreement need to be fair and reasonable. The agreement should not unduly favour one party over another, as this could invalidate the agreement in court.
4. No Undue Pressure
It’s crucial that neither party feels pressured or coerced into signing a post-nup. There should also be sufficient time allocated for contemplation before any decisions are made.
5. Written Document
To avoid potential misunderstandings or allegations of verbal promises, the post-nuptial agreement must be written and signed by both parties in front of a witness.
6. Review Clauses
Life’s circumstances can change drastically over time—you might have a child or face unemployment; hence, it’s crucial to include review clauses in your post-nup. These provisions allow for periodic reviews and adjustments, ensuring that it remains relevant and fair throughout the marriage.
Why Should You Consider A Postnuptial Agreement?
A well-drafted postnuptial agreement can provide certainty and peace of mind by protecting:
1. Business Assets:
If you own business assets either by yourself or jointly with others, a post-nup can protect these from being divided up on divorce.
2. Inherited Wealth/Expected Inheritances:
To ensure that wealth inherited during marriage doesn’t become part of matrimonial property subject to division upon separation/divorce.
3. Assets Acquired Before Marriage:
It provides security that individual pre-marital assets will remain as individual property.
4. Standard Of Living & Financial Security:
A post-nup can establish financial arrangements providing for the parties’ standard of living during marriage and/or in case of future divorce or separation.
5. Protecting Children’s Future Inheritance:
If you have children from a previous relationship, a post-nup can protect their rights to inherit specific assets.
In Conclusion
The decision to enter into a postnuptial agreement isn’t an admission that your marriage is doomed to fail. Rather, it offers assurance that if things do go wrong down the line, both parties are treated equitably and unnecessary disagreements or litigation can be circumvented. As with any legally binding contract, seeking professional advice before entering into such an agreement is paramount. This guide acts as an excellent starting point but should never replace personalised, professional legal advice tailored to your unique circumstances.
