A post-nuptial agreement, also known as a “post-nup”, is an agreement signed between a married couple, that considers any assets and responsibilities each spouse may have should the marriage ever break down. In most cases, a post-nup would be a variation of the pre-nuptial agreement or a new agreement.
What are the benefits of a post-nuptial agreement?
- A post-nuptial agreement will help protect the assets of both spouses. One preconception is that they are designed for the rich and famous, however, more and more people have built up assets in property, pension pots or other investments. If a divorce then takes place, the spouse can lay claim to part of those assets.
- It will remove any uncertainties around financial awards made by a court when a divorce is concluded.
- It will remove the further financial burden placed on couples when their marriage breakdown is acrimonious, and further costs are incurred on lengthy divorce battles.
- Financial concerns can occur during the marriage, and this can be one of the contributing factors leading to the breakup and ultimately divorce. A postnup allows couples to gain clarity over financial circumstances, assets and other investments as well as any future commitment for the care of children etc.
Are post-nups legally binding?
In England and Wales, pre-nups and post-nups are not legally binding contracts between the two parties. Ultimately, the court will decide how to share the assets, however, they will take into account the post-nup, as each party is aware when signing of the full implications that are being entered into, but will do so on the basis that the divorce concludes fairly.
There are several reasons why a post-nup could be challenged. It must take into account the needs of the financially weaker spouse, and also consider any future circumstances e.g. childcare. The court would generally consider the following factors:
- Would upholding the agreement be unfair to one of the parties?
- Was there any pressure to sign the agreement?
- Did both parties disclose all financial assets?
- Did the person with the most to lose fully understand the implications of signing the post-nup?
What are the main reasons for couples signing a post-nuptial agreement?
Post-nuptial agreements offer a clear view of the financial situation within the marriage, and this is one of the main causes of stress in a relationship. The agreements are attractive for couples who are looking to gain stability in their marriage and reduce the overall conflict.
During the recent lockdown and Covid-19 pandemic, cracks in many marriages have started to appear. The amount of time spent together in the same space, the inability to carry out normal social activities and financial stresses have all had an impact on marriages and relationships across the UK. Even one of these, under normal circumstances, would be enough to put pressure on a relationship, but when they are all combined, it creates a perfect storm. As things are getting back to normal, post-nups give couples the perfect opportunity to have some clarity over finances and commitments to provide some stability.
Another reason is more often than not seen blazoned across the front pages of tabloids. The celebrity divorce is something we have all come to grow accustomed to. Wealthy internationals often use England as a 'hub' for divorcing as the English court is often seen as favourable as there is a principle of sharing wealth equally among the divorcing parties. Often dubbed 'the divorce capital of the world', the court's jurisdiction for divorce is purely based on residency (this can be applied for within as little as six months). A pre or post-nup allows the couple to ensure that there is no expectation as to what each party gets if the marriage breaks down. This might seem like a ringfenced solution for the wealthy marrying a less wealthy partner, however, if the divorce proceeds in England, the document is not legally binding, and again the court would take a view of ensuring that the divorce is fair, especially for the financially weaker spouse.
The final reason is a change in financial circumstances. This could be anything from a large financial windfall, compensation payouts or inheritance. As such a couple (or one partner) may wish to put in place a post-nup agreement. This will allow certain assets to be ring-fenced. For example, if one partner receives inheritance this could be included in the post-nup that this financial amount would belong to them at the point of divorce.
As always, we recommend taking sound legal advice on any aspects of a post-nuptial agreement. Our Team of experienced lawyers can offer you the correct advice you need at the right time. We can walk you through the pros and cons of a post-nuptial agreement, prepare the document and witness the signing. We can also keep the document in storage so you can be sure that it's safe and sound.
