When you’re getting married, it can seem counter-intuitive to contemplate separation or divorce. Still, it is not uncommon for couples to plan for the possible breakdown of their relationship by way of a prenuptial agreement. But even without a prenup in place prior to marriage, an agreement can be reached at any point after the wedding so as to provide certainty of arrangements in the event of separation. These are called postnuptial agreements.
The following guide looks in detail at postnuptial agreements, from what these are and when these might be used by a married couple to what a good post nup should include. These provisions also apply to anyone who has already entered into a civil partnership and would like a way of protecting any pre or post-partnership assets and wealth.
What is a postnuptial agreement?
A postnuptial agreement sets out how any assets and financial resources should be divided between a couple if their marriage or civil partnership were to subsequently breakdown.
While a prenuptial agreement is an agreement entered into prior to the marriage taking place, it is also possible to enter into a similar agreement after the event. This is known as a post nup or postnuptial agreement. In the case of civil partners, they are sometimes referred to as post-civil partnership agreements or post-cips.
In either case, the agreement will set out a couple’s rights regarding any property, income and other assets acquired both individually and jointly, either prior to or after the marriage or civil partnership has been entered into. In this way, the agreement is designed to provide the parties to the agreement with clarity and certainty around the financial arrangements should they ever decide to separate in the future, thereby reducing the risk of acrimonious divorce or dissolution proceedings where expectations have not been set out in writing.
Why use a postnuptial agreement?
Postnuptial agreements can be used in a number of different scenarios. In some cases, the parties may decide to wait until after their wedding or civil ceremony to enter into a financial agreement in the event of any relationship breakdown, in this way removing any pressure from each other shortly before. It could also be where one person anticipates inherited wealth or has had a change of career during the course of their marriage or partnership, and would like to protect that wealth for themselves or any children.
The circumstances of a couple often change over time in ways or to an extent which cannot be envisaged, where the longer the marriage or civil partnership has lasted, the more likely this is to be the case. In some circumstances, the couple may even have a pre nup in place, but wish to reaffirm its’ terms shortly after the wedding or amend its terms later down the line. While a pre nup lays out details of how any assets and liabilities will be dealt with in the event of divorce or dissolution, it can be difficult to plan for all hypotheticals, whereas a post nup can allow a couple to address specific assets and liabilities as and when they arise.
Are postnuptial agreements legally binding?
The approach of English law to postnuptial agreements differs significantly from Europe and various other jurisdictions across the globe. Most jurisdictions accord legally binding status to nuptial agreements and hold the parties to the contractual provisions contained within them, albeit sometimes subject to specified safeguards or exceptions. In contrast, under English law, it is the court that acts as the arbiter of the financial arrangements between a former couple when it brings a marriage or partnership to an end, where a prior agreement between the parties is only one of the matters which the court will consider.
Strictly speaking therefore, postnuptial agreements, as with prenuptial agreements, are not automatically legally binding in English courts. This is because the parties to the agreement cannot override the court’s discretion under the Matrimonial Causes Act 1973 or the Civil Partnership Act 2004 to decide how to redistribute their assets and income on an application for a financial remedy. As such, entering into either a pre- or postnuptial agreement does not guarantee protection over any assets or money acquired either prior to or during the course of a marriage or civil partnership, least of all where both parties have not sought independent legal advice prior to entering into this type of agreement.
The circumstances in which a nuptial agreement is entered into will play a key role in how much weight that agreement is given by the court in the event of any dispute between the parties, where seeking independent legal advice will amount to strong evidence of a party’s understanding of its’ implications. However, in the context of divorce or dissolution, the court will take into account various other factors in its’ assessment of fairness, including the welfare of any children to the marriage or civil partnership, the length of the marriage or partnership, the responsibilities undertaken and assets acquired during this time, as well as the future needs of both parties when it comes to housing arrangements and outgoings.
What have the courts said about postnuptial agreements?
In the decision of the Supreme Court in the case of Radmacher v Granatino [2010] UKSC 42, clear guidance was given by the court in the context of prenuptial agreements, although the same guidance applies equally to postnuptial agreements.
Having acknowledged the fact that a court is not obliged to give effect to any type of nuptial agreement when considering the grant of a financial remedy on divorce or dissolution — where the parties cannot simply oust the jurisdiction of the court — it was said that appropriate weight must still be given to such an agreement as a relevant factor. It was also advised by the court that contractually binding effect should ‘usually’ be given to nuptial agreements where freely entered into with a full appreciation of the implications, unless it would not be fair to hold either party to that agreement in all the circumstances. This essentially means that, in many cases, decisive weight may be given to the provisions of a postnuptial agreement, depending on the facts involved.
The court went on to conclude that “If parties who have made such an agreement, whether ante-nuptial or post-nuptial, then decide to live apart, we can see no reason why they should not be entitled to enforce their agreement”. Strictly, this statement is not binding on the lower courts, as it was not an issue on which the case itself was decided on its’ facts. Still, it is regarded as being of the highest authority and is therefore typically applied by judges.
Factors can the court take into account?
Section 23 of the Matrimonial Causes Act 1973 gives the court the power on granting a decree of divorce to make a wide variety of financial orders, while section 25 provides that, in addition to any children under 18, the court shall have regard to the following factors:
- any income, earning capacity, property and any other financial resources which each party currently has or is likely to have in the foreseeable future, including any increase in earning capacity which it would be reasonable to expect a party to take steps to acquire;
- the financial needs, the obligations and the responsibilities which each party currently has or is likely to have in the foreseeable future;
- the standard of living that had been enjoyed by the couple prior to the breakdown of their marriage;
- the age of each party and the length of their marriage;
- any physical and/or mental disability of either party to the marriage;
- the contributions made by each party or likely to be made in the foreseeable future to the welfare of the family, including caring for the family and/or looking after the home;
- the conduct of each party, where it would be inequitable to disregard it;
- the value to each party of any benefit which, by reason of the marriage officially ending, that party will lose the opportunity of acquiring.
Similar provisions are set out under Schedule 5 of the Civil Partnership Act 2004.
When is a postnuptial agreement no longer valid?
As set out above, a court is not obliged to give legal effect to a postnuptial agreement although, in most cases, this will be a key consideration in assessing fairness when it comes to the division of the matrimonial or partnership pot when making a financial order.
However, there may be certain circumstances where the court decides not to give effect to this type of agreement, using its’ discretion to divide any assets and wealth in an entirely different way, where fair to do so. This could be where, for example, one or both of the couple to the marriage or partnership did not receive independent legal advice before entering into the agreement. It could also be where one or both have failed to give full disclosure of assets and property before the agreement was made or where the court otherwise considers that enforcement of the agreement would cause significant injustice.
Otherwise, unless both parties opt to withdraw or cancel a postnuptial agreement having signed it, and this is again made clear in writing, the agreement will continue to play a key role in determining the division of assets and money on the breakdown of a relationship.
Can you withdraw or cancel a postnuptial agreement having signed it?
As with any agreement, it is possible to withdraw or cancel a postnuptial agreement having already signed it, provided both parties agree to this. In these circumstances, the court is unlikely to have any regard to the agreement, given that a subsequent agreement has been reached between a couple not to take the provisions of the original agreement into account.
However, the court is likely to pay careful attention to the circumstances surrounding any purported withdrawal or cancellation arrangement. This is because this too could be taken into account, and given appropriate weight, in deciding a fair division of assets.
What happens on a relationship breakdown with a postnuptial agreement?
If you have a postnuptial agreement in place, as with a prenuptial agreement, this typically means that if your relationship breaks down, and you and your ex partner decide to get divorced or to dissolve your civil partnership, there is a far lesser chance that any dispute will be raised as to the division of the marital or partnership assets. This is because entering into a postnuptial agreement will help to manage expectations and minimise the prospects of either party seeking to challenge what has been pre-agreed on divorce or dissolution.
Moreover, by seeking expert assistance to help put an agreement in place, this will give your post nup the best possible chance of being upheld by the court, if at all necessary.
What should a postnuptial agreement include?
When deciding what provisions to include in a postnuptial agreement, it is important to ensure that this is drafted professionally by a solicitor with experience in these types of agreements. In this way, your solicitor can include requirements to help maximise the prospects of an agreement being upheld by a court on divorce or dissolution. However, it is also important to ensure that both parties have independent legal advice. As such, even though it is appropriate for one solicitor to take charge of drafting the main provisions, the other solicitor should always have some input, so as to protect the interests of their client.
For completeness, any good postnuptial agreement should not only clearly reflect the agreement reached between a couple as to who will get what in the event of divorce or dissolution, but it should also make clear that both parties have received advice from their own solicitor and fully understood the implications of the agreement entered into.
By setting out a clear declaration of understanding within the agreement itself, preferably appearing just above the parties’ signatures, either party would find it difficult to later challenge the contents of that agreement and any decision by the court to give it decisive weight. Equally, it is important that all assets should be properly disclosed by either party and there should be no pressure from other parties to sign the postnuptial agreement.
Postnuptial agreement FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
