ARTICLE
27 August 2024

Pre-Nuptial Agreements & Post-Nuptial Agreements

AL
Ashtons Legal

Contributor

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Nuptial agreements, including pre-nuptial and post-nuptial agreements, outline how assets should be divided in the event of divorce or dissolution. Though not legally binding, courts heavily consider these agreements following Radmacher v. Granatino [2010]. Pre-nuptial agreements are signed before marriage, while post-nuptial agreements are made after. They can protect assets, including businesses, future inheritances, and interests in complex financial structures.
United Kingdom Family and Matrimonial

The topic of ‘Should we get a Pre-nup' can sometimes be quite an upsetting thing to consider for some couples, as ultimately, you are creating a plan of what would happen if your relationship were to cease. However, it is something that is important to consider and is becoming increasingly popular.

A Nuptial agreement is an agreement entered into with either your spouse or fiancé before or during marriage. A Pre-nuptial agreement is made before marriage and in contemplation of marriage, whereas a post-nuptial agreement is made after marriage.

Such an agreement outlines what should happen to your assets in the event that your marriage or civil partnership were to end, and sets out how a financial settlement is to be achieved in the event of divorce or dissolution. They can record how a couple's assets are to be held and/or dealt with whilst they are married.

What is the benefit of a Pre-nuptial / Post-nuptial agreement?

The benefit of you and your partner having a nuptial agreement is that it provides an indication as to how assets should be divided between the parties when a relationship has broken down. It can prevent disputes, and ultimately, it can protect you (and your partner) from expensive and/or protracted court proceedings. Such agreements can preserve wealth and ‘ring fence' assets.
Nuptial agreements are not legally binding, but following the case of Radmacher -V- Granatino [2010] UKSC 42, the Supreme Court in England and Wales now recognises both Pre-nuptial and post-nuptial agreements (where this has been agreed by two consenting adults) despite them not being automatically enforceable. Courts are now heavily influenced by them as it is a demonstration of the intention of the parties. They can consequently influence the outcome of divorce settlements in many cases (unless the agreement is grossly unfair to one party or includes the needs of any children).

What is a Pre-nuptial agreement?

A Pre-nuptial agreement (Pre-nup) is a legal agreement signed by a couple prior to marriage or a civil partnership that covers issues such as if the partnership were to end, what would happen to their finances or assets. It is strongly advised that both parties seek their own independent legal advice and in fact, it is a condition of entering into such an agreement and to be able to rely upon its contents. Each party must have a full understanding of exactly what they are entering into for the agreement to be valid and upheld in law.

Are Pre-nuptial agreements legally binding?

While Pre-nuptial agreements are not currently legally binding (i.e. a Judge dealing with your divorce can ignore the agreement if they wish), if the Pre-nup is created in the right way, it can be taken into consideration by a Judge during divorce proceedings.

For any nuptial agreement to be upheld by a Court, the following conditions will need to have been met when creating the agreement:
Both parties must provide full and frank disclosure of their financial position. They must have full knowledge as to the financial position of each other.
The Pre-nup should be signed a reasonable time before the marriage takes place (at least 28 days); there should be adequate time to reflect upon the provisions within any Nuptial agreement
Neither party should be under pressure to sign the agreement. There should be no duress or coercion from either party.
Both parties must have received independent legal advice before signing the agreement. They must both have full knowledge of the implications of such an agreement.
The agreement must be fair to both parties and must provide for the reasonable financial needs of the spouse, who is financially less well-off.
Any significant changes that occur during the marriage (such as the birth of children) will need to be taken into account and appropriate provisions made.

Do I need a Pre-nup?

While many people still think of Pre-nuptial agreements as being for famous celebrities or the super-rich, they are increasingly common and useful for a wide range of couples.

A Pre-nuptial agreement can be useful in a number of circumstances, including:

  • If you have assets such as a business that would be difficult to split 50:50 (particularly if a third party has an interest in such a business)
  • If one or both parties have children from a previous relationship or other dependants whose inheritance you wish to protect and safeguard
  • If you have an inheritance, compensation settlement or other assets, you need to protect

A Nuptial agreement is a good way in which to protect and preserve the planning and passing of assets to future generations, and to prevent them being lost from a family due a divorce settlement.

Why would I need a Post-nuptial agreement?

You can enter into a nuptial agreement at any stage, but there may be occasions where you want to enter into one during a relationship or marriage. A Post-nuptial agreement may, for example, be appropriate if you suddenly inherit a large sum of money that you wish to save for later (for the benefit of any children, for example). A Post nuptial agreement would ensure that this money is then not lost or apportioned in a divorce settlement or diverted to another party in the event of a relationship breakdown.

Can I protect assets in my sole name?

You can protect your assets in your sole name, but formalities need to be taken, and the requirements as set out previously must be met. However, the court will not uphold any agreement if it is deemed to be unfair and does not meet both party's needs. One reason it may be deemed to be unfair is if your future spouse does not have any financial resources, and all the assets listed within the agreement are in your sole name then there is a risk that the agreement will not be upheld.

Can I protect future inheritance?

It is possible to include future assets within your Pre-nuptial agreement. Future assets, such as inheritance, future increases in the value of a business, gifts from family, can be included as a type of ‘Separate property'. It is important that you include all details of future inheritance or the potential of increasing values of businesses and such like and this is why full and frank disclosure of all financial information is crucial if the Pre-nuptial agreement is to be upheld.

Can I protect my business?

Having a Pre-nuptial agreement can be a good idea for business owners. There are multiple ways in which a Pre-nup enables you to protect your business, such as, but not limited to; Determining what percentage of the business your spouse would be entitled to in the event of a divorce, specifying how you would value the business, and also, outline what will happen with the appreciation or depreciation of the business from the date of marriage. There are many things to consider when having a pre-nup to protect your business, which is why we will discuss the options with you to make sure your agreement is in the best state to protect your business.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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