Financial Matters
Postnuptial agreements
Has your marriage changed over the years, perhaps you have inherited money? Would you consider signing a postnuptial agreement?
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Post-nuptial agreements can carry significant weight in the courts, similar to pre-nuptial agreements (which are entered into before marriage), but they are not automatically legally binding.
This often comes as a surprise to people. In the landmark Supreme Court case of Radmacher v Granatino, the court confirmed that nuptial agreements may be upheld where both parties entered into the agreement freely, with a full understanding of its implications, unless it would be unfair to hold them to the agreement.
To give a post-nuptial agreement the best possible chance of being upheld, it should be properly drafted and both parties should obtain independent legal advice before entering into the agreement.
It is also important that both parties provide full and frank financial disclosure before the agreement is signed.
A post-nuptial agreement should be reviewed regularly every 3-5 years to ensure it continues to reflect both parties’ circumstances and remains fair. For example, it may be sensible to review the agreement if you have children or if there is a significant change in financial circumstances.
Where an agreement has been properly entered into and remains fair at the time it is considered by the court, it is more likely to be upheld.
What You Need to Know About Postnuptial Agreements
Marriage is a legal union between two parties. When you enter that partnership, you start sharing assets. In situations where couples stay happily married, sharing assets is not a problem.
But, not all marriages remain intact. Through divorce proceeding, partners will have to divide their assets, including properties, money or other valuables. So, it is not uncommon for both sides to disagree if that situation arises.
Circumstances within a marriage can also change. Couples can open a business, make investments or receive a significant inheritance. If you were to separate in the future you may want certainty as to how those assets will be divided. This is why couples opt for postnuptial agreements.
Contracts such as these can reflect a change in the passage of time. Couples can choose to sign it for a number of reasons. Such as:
- Starting up a business venture
- Assigning business ownership
- Giving birth or adopting a child
- Protecting an inheritance
- Pension distribution
- Insurance coverage
The postnuptial agreement becomes a safeguard for married couples. It outlines what they intend each individual should be entitled to if they separate. Want to know how much you are entitled to? Check out our divorce calculator.
Whilst postnups are a relatively new concept in England and Wales and are not “legally binding,” they can get recognition if they are properly drafted, fair, there has been full and frank financial disclosure, the agreement has been correctly signed, with no undue pressure having been applied to a party. The same principles as apply to prenuptial agreements.
Postnuptial Agreements: The Pros and Cons for Married Couples
Some couples feel uncertain about entering into a postnuptial agreement. Understanding the potential advantages and disadvantages can help you decide whether it is the right option for your circumstances.
Potential benefits of a postnuptial agreement
- Encourages financial transparency
A postnuptial agreement can encourage open discussions about finances, including income, assets, debts and future financial goals. This may help couples better understand their financial position and plan more effectively for the future. - Provides clarity after a change in circumstances
If there has been a significant change in circumstances—such as receiving an inheritance, starting a business, entering a second marriage or experiencing a period of separation—a postnuptial agreement can help clarify how assets should be treated moving forward. - Helps protect family interests
Where one or both spouses have children from previous relationships, a postnuptial agreement may help provide clarity around inheritance planning and protecting certain assets for children or other family members. - Can reduce uncertainty in the future
By setting out financial expectations in advance, a postnuptial agreement may help reduce disputes if the relationship breaks down in the future.
Potential drawbacks of a postnuptial agreement
- It may be an uncomfortable conversation
Some couples may find discussions about finances and future separation difficult, particularly if one party feels the agreement suggests a lack of trust. - Independent legal advice is important
If both parties do not receive proper legal advice or fully understand the terms of the agreement, this may affect how much weight a court gives it in the future. - Pressure can create disputes
An agreement should be entered into freely and without pressure. If one party feels pressured into signing, this could lead to future disputes about the validity of the agreement.At Austin Kemp Solicitors, our experienced family law solicitors can advise on whether a postnuptial agreement is appropriate for your circumstances and help ensure any agreement is prepared properly.
The Importance of Fairness When Drafting a Postnuptial Agreement
Detailed postnuptial agreements can avoid the need for the two parties to bicker about who gets more from their assets. It can help you lay out a plan on how to deal with other matters associated with your marriage, like inheritance or child-related issues.
A solicitor is essential in drafting these postnup agreements. That’s because they are not always legally binding and when not drafted correctly, they may be invalid and you can lose the assets you wanted to protect. Austin Kemp Solicitors have the necessary knowledge and skills for writing postnuptial agreements.
We can identify different problems, offer solutions and help you negotiate with your partner on how best to protect these assets. We understand the interplay of relationship dynamics and know how important it is to leave aside emotion and focus on creating a mutually beneficial contract.
Protecting Your Assets with a Postnuptial Agreement
Postnuptial agreements make the divorce process more efficient by saving you money and time.
You can also use the postnuptial agreement to revisit the terms of the prenup. This is a sensible option if you recently had a career change, made some investment or received an unplanned inheritance.
If you need help writing any legal documents, our divorce solicitors at Austin Kemp can help. Contact us today at 0333 311 0925. We are at your disposal.
