Pre-nuptial and
Post-nuptial Agreements
The media is always interested in reporting on the cost and acrimony of celebrity divorces. Whether the “consciously uncoupling” parties had a nuptial agreement is regularly referenced in the gossip columns, meaning most people have an awareness of these agreements, but usually not all the facts.
However, pre-nuptial (i.e. signed before the marriage) and post-nuptial (i.e. signed during the marriage) agreements are not just for the rich and famous. They are a useful tool for financial planning and, anecdotally, the Winckworth Sherwood Family Team are seeing them used much more frequently to protect people’s assets in the event of divorce. They are not just for married couples either, as those entering or already in civil partnerships can put them in place as well.
Due to their portrayal in the media, lots of people know a little about them and only a few know enough. This, coupled with the different approaches to their enforceability in different jurisdictions, produces widespread confusion about nuptial agreements. Some of our most frequently asked questions about them are addressed below to hopefully alleviate some of this confusion.
What are nuptial agreements and why are they useful?
A nuptial agreement is a written agreement that records how a (soon to be, or already married) couple’s assets acquired before and during the marriage will be treated whilst they are married and in the event of a breakdown of the relationship.
When a marriage breaks down, under the current legal framework for divorce, each party will generally have the right to make a claim over the “matrimonial assets”. This usually includes the family home, money in bank accounts and investments, and basically anything that has been acquired through the marriage (with some exceptions). Without a nuptial agreement, the starting point for the court when deciding how to divide the matrimonial assets is that everything should be shared 50/50, or at least so each person can house themselves, pay their bills, and ensure that any children are adequately provided for. However, the court has discretion to depart from a 50/50 split and make any division they think fits within these principles and to ensure the outcome is fair for both parties.
If you have a nuptial agreement in place, you reduce the risk of having to pay half or more of the assets you have acquired or received through the marriage to your spouse. It also reduces the risk of a messy divorce that ends up in the gossip columns.
Are nuptial agreements actually enforceable?
This is the question our family team probably get asked the most about nuptial agreements. And for good reason: if you are spending money on solicitors drafting an agreement, you want it to hold weight when it comes to enforcing it. They are not wrong to question it, as this has been a hotly litigated topic since couples in this country started signing them.
Even if you do enter into a nuptial agreement, the divorcing couple will still need to file a consent order with the family court to settle the financial claims against each other, which is reviewed by a family court judge. Unlike in other jurisdictions, when deciding whether to adhere to a nuptial agreement in the event of a divorce, the courts will still retain their ultimate discretion to decide whether the terms of the agreement are adhered to.
The current legal framework is based on the Supreme Court’s decision in Radmacher v Granatino [2010] UKSC 42, and the subsequent guidance from the Law Commission, entitled: “Law Commission Consultation Paper No 343, Matrimonial Property, Needs and Agreements”. Both state that the likelihood of an agreement being followed by a family court judge will largely be based on whether the agreement is ultimately a fair division of assets and allows each party (and any children of the family) to meet their needs. For the judge approving the settlement of the financial claims, the agreement also needs to meet the following conditions:
- It was entered willingly by the parties (i.e. without any duress or influence from anyone else, particularly from the other party or their family members);
- Each party was fully informed of both the legal effect of the agreement and the financial assets, liabilities, and sources of income of the other party before it was entered into (i.e. both parties disclosed their true financial position at the time the agreement was signed); and
- Each party intended that that the agreement should be implemented if the marriage came to an end.
There is no “one size fits all” nuptial agreement, which is why care is needed in the drafting of these agreements as using a standard template will not be worth the paper it is written on.
Do I need to have legal advice or can my partner and I do this ourselves?
The short answer is: you need to have legal advice if you want to increase the likelihood of the agreement being adhered to on a divorce. Each party will need to have their own independent advice to ensure the conditions for enforceability are adhered to. If you enter into an agreement without full appreciation of the legal effect of the agreement, then it is unlikely a court will implement the terms in the event of a divorce. Each solicitor will also sign a certificate at the back of the agreement to verify that their client has had the relevant advice to understand the rights and responsibilities they are signing up to by completing the agreement.
Like with anything, if it is worth doing, it is worth doing properly.
When would it be a good idea to sign a nuptial agreement?
- Where there is a disparity in the assets owned by the parties, or where there is a similar level of wealth but both have agreed that they would want to protect this on divorce. Similarly, if there are assets or substantial liabilities that one partner has that the other does not want to be equally liable for on a divorce, then a nuptial agreement would limit exposure.
- Where there are considerable family assets involved, for instance family businesses, trust interests or substantial sums due to be received through inheritance or lifetime gifts that the family intend only to be for the benefit of their child, not the new spouse.
- Where there are pre-acquired assets that one party wants to protect from being divided on a divorce, particularly if they have children from a prior relationship that they are currently supporting and they want to ensure their support is protected.
- Where the parties want a nuptial agreement to mirror one that they have had drawn up in a foreign jurisdiction, or if they elected to use the “separate property regime” in a European wedding and want the same principles to apply when they move to England or Wales.
What are the first steps to obtaining a nuptial agreement?
Whilst often touted as “unromantic”, and many see them as planning for the divorce before the marriage has even begun, having a nuptial agreement in place might be the difference between a straightforward amicable divorce where you part as friends, and facing tens of thousands in legal bills and several emotional trips to the family court. Although unromantic, the reality is that marriage is a binding legal and financial commitment, many go into it without preparing for the financial consequences.
If any of the above bullet points apply to you, the following initial steps can be particularly useful:
- Take stock of your personal financial situation – the most important questions to ask yourself are:
- What do I have? As well as property and liquid capital, consider other valuable and personal items (like art collections and jewellery).
- What might I have in the future? People often forget to factor in inheritance or benefits from trust funds. Consider what you know about your partner’s finances, and how much your financial health is currently linked through joint assets or liabilities.
- Reflect on your respective priorities and attitudes – it is not uncommon to be unsure at this stage and this can be explored with your advisors as part of the process.
- Call our family team to establish whether a nuptial agreement might be suitable for you.
- With our assistance and considering your personal circumstances, then plan effective, amicable communication with your fiancé(e) or spouse.