What Is a Postnuptial Agreement?
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What is a Post-nuptial Agreement?
Postnuptial agreements can be used when a couple has previously entered into a prenuptial agreement before marriage and wants to confirm that the choices they made still stand after getting married.
Post-nups will typically set out how the financial assets or liabilities of each party such as property, savings, pensions & maintenance, etc should be distributed in the event of a divorce or dissolution of a civil partnership.
Other matters that could be included in the agreement are what would happen to any property inherited by one partner during the marriage or how you would deal with any debts.
The aim of the postnup agreement, therefore, is to keep individual assets separate rather than allowing them to become marital property within the ‘matrimonial pot’.
Thereby minimising the possibility of divorce-related financial disputes ending up at the mercy of divorce proceedings in court following a breakup.
It is strongly recommended that the agreement be reviewed and updated periodically, especially after children are born, as the court will always take children’s needs such as child custody and child support into account first when deciding on a divorce settlement.
Are postnuptial agreements legally binding?
Like prenups, currently, postnuptial agreements are not automatically legally binding in the UK.
Courts are not forced to follow the instructions contained in post-nups, they can determine that assets have been added to the matrimonial pot and how these should be divided notwithstanding the terms of any post-nuptial agreement.
But just because courts are not bound by postnups, they will generally take them into account, so they can still be very useful by influencing a financial settlement.
The landmark Supreme Court case of Radmacher v Granatino came up with the following guidelines for family courts to follow when deciding whether to enforce prenuptial or postnuptial agreements:
“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.”
What this essentially means is that:
- Each party should take independent legal advice before entering into a postnup and they should not feel under duress etc.
- Both parties should understand the full extent of any financial claims they might be giving up by signing a postnup (eg any hidden wealth can reduce the effect of an agreement).
- There is an overriding duty of the court to ensure that the needs of both parties – in particular where children are involved – are met.
A postnuptial agreement can include the following:
Some of the common elements of postnups include:
- Matrimonial home – a couple may decide in advance who will be entitled to remain, or if the property should be sold if the marriage breaks down.
- Property portfolios and inheritances – note that inheritances or property owned before marriage are sometimes automatically kept out of the matrimonial pot.
- Maintenance – if one partner is in a stronger financial position, they may agree in advance to support the other party in the event of divorce.
- Savings, shares, and pensions – the full extent of these should be stated upfront.
- Business assets – particularly important if one party already has significant business interests before marriage.
How do I create a postnuptial agreement?
Often the best place to start for couples considering a postnuptial agreement is to give financial disclosure by listing all their assets and then deciding how these should be split between them in the event of divorce.
Additionally, any intentions regarding spousal support (maintenance payments) and other financial arrangements should be noted.
Many married couples believe they can use an online post-nuptial agreement template downloaded from Google to create their postnup.
But although these are a useful way to discover the basic terms of the agreement, it does need to be drafted in a particular way by solicitors to be legally binding.
For peace of mind creating a postnuptial agreement is a process that should be carried out by family lawyers.
See more on this topic: Can You Write Your Own Nuptial Agreement?
Things to bear in mind when creating a postnup
Entering into a legal contract is a big step and it’s not something you should do without considerable thought and advice. Here are five things you should bear in mind when considering obtaining a Postnup;
- Children – courts will always prioritise the needs of children in a divorce, so a postnuptial agreement should take account of their financial needs.
- Legal advice – independent legal advice should be sought by each party before signing postnups.
- Wealth – postnuptial agreements are generally more useful for high net worth individuals and couples.
- Prenups – couples who decide to change the terms of an existing prenuptial agreement can revoke this and create a postnup instead.
- Regular Review – postnups should be periodically reviewed to see if they require amending.
As with other such agreements, prenuptial agreements should also be periodically re-evaluated and updated to reflect any changes in your circumstances, e.g. buying a new home or having children.
Avoid believing some of the most common myths about nuptial agreements as they can only hinder your decision making abilities.
We would advise you to look at your agreement every 4 to 5 years to ensure it’s up-to-date and accurate; this agreement then becomes a postnuptial agreement.
Just like prenups, postnups are also looked upon favourably by the courts in the event of a divorce.
If you would like free family law advice about obtaining a postnuptial agreement online via Divorce-Online please call us on 01793 384 029