Prenuptial and Postnuptial Agreements
With divorce rates ever increasing, many people are trying to find a way to protect their financial assets before marrying in the hope of avoiding a lengthy and costly dispute about money and assets upon divorce. This can potentially be achieved by entering into a Pre-Nuptial or Post-Nuptial Agreement.
A Pre-Nuptial Agreement is a formal written agreement which a couple sign prior to getting married or entering into a civil partnership. The agreement sets out who owns what assets prior to the marriage (or civil partnership) taking place and also sets out how the couple believes those assets should be separated in the event of divorce or separation. The agreements can also deal with assets such as future inheritance, as many people are keen to protect this upon divorce.
A Post-Nuptial Agreement does exactly the same thing as a Pre-Nuptial Agreement, only the couple signs a Post-Nuptial Agreement once the marriage or civil partnership has taken place.
The media often reports on the status of Pre- and Post-Nuptial Agreements and they do not always get the law right. Strictly speaking, the Court, upon divorce, does not have to uphold either Pre- or Post-Nuptial Agreements as they are not yet legally binding in England and Wales which means the Court could, in theory, make a financial order which differs from how the couple envisaged the assets would be divided at the time of marriage.
However, the Supreme Court decision in the case of Radmacher -v- Granatino suggests that the Court will attach considerable weight to these types of agreements and will divide the assets in accordance with the agreements unless:
- one party did not freely enter into the agreement (ie the other party forced them or put pressure on them to sign it);
- one party did not appreciate the legal consequences of signing the agreement; or
- it would be unfair to hold either party to the agreement.
In essence, the Court is now much more likely to take into account a Pre- or Post-Nuptial Agreement on divorce and hold both parties to it providing it has been drafted correctly.
There are four main things to consider if you are thinking about entering into a Pre- or Post-Nuptial Agreement:
To convince the Court that the division of assets should take place in accordance with a Pre- or Post-Nuptial Agreement, you have to make sure the agreement is fair and realistic. Whilst it is usually the case that one party will benefit more than the other party upon entering into a Pre- or Post-Nuptial Agreement, the agreement should realistic taking into account the current divorce law and how the Court is likely to divide assets upon divorce.If it does not meet the fairness requirement, the Court may not follow the terms of the agreement.
Pressure or Duress
In order for a Pre- or Post-Nuptial Agreement to be endorsed by the Court, both parties must have entered into the agreement voluntarily and there must not be any evidence of either party putting pressure on the other or forcing them into signing the agreement. Again, if there is evidence of this, the Court may not uphold the agreement.
To avoid any arguments of duress or pressure arising, we normally suggest that, in respect of Pre-Nuptial Agreements, they should be entered into at least 28 days before the marriage or civil partnership takes place.
Whilst it is not a mandatory requirement for there to be financial disclosure, it is usually recommended. By both parties showing each other what assets and income they have, it shows the Court that you were both fully aware of the other’s financial position and what you could potentially be giving up by entering into a Pre- or Post-Nuptial Agreement. It will show the Court that each of you had a full understanding of what the financial implications of the agreement were.
It is strongly recommended that independent legal advice should be sought by each party before entering into a Pre- or Post-Nuptial Agreement. Your solicitor should also sign the agreement on your behalf. Not only does this ensure that you are aware of what financial claims you could be giving up, it also goes some way to show the Court that thought was given to the agreement and that you understood the legal position before signing the agreement.
Your next step – talk to IBB Solicitors
If you are considering getting married or entering into a civil partnership but want to try to protect your assets as much as possible in the event of future relationship breakdown, please contact one of our Family Lawyers who will be able to assist you with your enquiries.