What is a Postnuptial Agreement?

What can be included in a postnuptial agreement?

Postnuptial Agreements can be used when a couple have previously entered into a Pre-nuptial Agreement before marriage and want to confirm that the choices they made still stand after getting married.

Prenups and postnups consist of a contract which can include whatever you want, but typically will set out how the 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 civil partnership – Other matters that could be included in the agreement is 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 post-nuptial is to keep individual assets separate rather than allowing them to become mixed together in the ‘matrimonial pot’ – and consequently to minimise the possibility of divorce-related financial disputes ending up in court.

It is strongly recommended that the agreement be reviewed and updated periodically, especially after children are born, as the Divorce Court will always take children’s needs into account first when deciding on a financial settlement.

Are postnuptial agreements legally binding?

Currently postnuptial agreements are not legally binding in the UK. Courts are not forced to follow the instructions contained in postnups (or prenups); they can determine that assets have been added to the matrimonial pot and how these should be divided notwithstanding the terms of any postnuptial agreement.

But just because courts are not bound by postnups, they will generally take them into account – so they can still be very useful. The landmark Supreme Court case of Radmacher v Granatino came up with the following guidance 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.

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 – see our separate article on Inherited Assets and Divorce
• 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 up front.
• Business assets – particularly important if one party already has significant business interests before marriage.

How do I create a postnuptial agreement?

Further articles and additional resource can be found here: Information on Prenuptial Agreements

But often the best place to start for couples considering a postnuptial agreement is to make a list of all their assets and how these should be split between them in the case of separation, along with any intentions regarding maintenance payments etc.

Many clients believe they can use an online template to create their agreement, however, although these are a great way to discover the basics involved with the agreement, they need to be within a particular way to be legally binding.

Creating a postnup is a fairly straightforward process that can be carried out by family solicitors. It is also possible to use online services – such as Divorce Online – to form an effective agreement, generally at a lower cost.

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.

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 advice on obtaining a postnuptial agreement online via Divorce-Online please call us on 01793 384 029