Many people will have heard of a Prenuptial Agreement and know that this is something couples enter into before they get married to protect their assets. What people may not know is that you can still enter into an agreement to do this, even after the marriage has occurred. This is known as a Postnuptial Agreement.
What are Postnuptial Agreements?
A postnuptial agreement (also known as a post-nup) sets out exactly how assets should be distributed between you and your partner should your marriage break down. It is a written contract that is signed by a couple during their marriage and not before it as is the case with a pre-nuptial agreement.
A Postnuptial Agreement is a contract that is drawn up after marriage or a couple have formed a civil partnership. The Agreement provides details on how the couple’s assets and property would be split in the event of the couple divorcing, separating or upon death.
A PostNuptial Agreement is similar to a Prenuptial Agreement except that it is made after the marriage or civil partnership has taken place.
Postnuptial Agreements are for people who are married or in a civil partnership, and are made after the marriage or civil partnership has taken place. Postnuptial agreements can be useful in minimising disagreements and avoiding possible litigation. Should the marriage come to an end, having a postnuptial agreement in place can help protect you. It is vitally important that both you and your spouse each take independent legal advice before entering into an agreement.
The purpose of the Postnuptial Agreement is to record the agreement reached between a couple in relation to what will happen to their finances, should the marriage break down. Sometimes, a couple will have entered into a Pre-nuptial Agreement before they got married and then choose to enter into a further Postnuptial Agreement to confirm the arrangements still stand after they have got married.
What should a Postnuptial agreement contain?
Postnuptial Agreements can include anything you want them to, but the main purpose is to set out what will happen to your finances if the marriage were to break down. Postnuptial agreements don’t have to cover everything you own, but typically cover the following areas:
What would happen to property either of you brought into the marriage :
- What would happen to the (matrimonial) family home
- What would happen to any property given to you or inherited during the marriage
- What would happen to joint assets
- What would happen to your pensions
- How you would deal with any debts
- Whether either of you would pay or receive any maintenance and, if so, for how long
- Assets & belongings
- Debts – including settling outstanding debts
- Future income
- Property – how any property will be split, including second homes
- Wills – what will be covered?
- Maintenance – how much will be paid?
- Establishing clear property ownership rights and responsibilities
- Changing the character of assets from non-divisible separate property to divisible community property
- Transferring a spouse’s separate property to the other spouse as their separate property
- Modifying the terms of an existing premarital agreement
- Any expected inheritances
Are Postnuptial Agreements Legally Binding?
Postnuptial Agreements are currently not legally binding in England and Wales. So if a couple get divorced the Court does not have to follow what is contained in the agreement when deciding on a financial settlement, although usually it will be taken into consideration.
The guidance for the Judge is that they should implement a Postnuptial Agreement that is freely entered into by each person with a full appreciation of its implications, unless the current circumstances would make it unfair on either of the parties to do so.
It is therefore very important that a Postnuptial Agreement is prepared properly. Both people must enter into the agreement voluntarily, without undue pressure, and be informed of its implications. This means that each person will need to have independent legal advice on what they would be legally entitled to if there isn’t a Postnuptial Agreement in place, and how the agreement may change this.
It is also important for each person to make full disclosure of their assets (including property, money in bank accounts, pensions and income) at the time of the agreement. All of this should be done before the agreement is signed.
It is important that the agreement is reviewed every so often, particularly after any children are born, as the Court will take the children’s needs into account first when deciding on a financial settlement. The Court will not uphold an agreement that does not take the needs of your children into account, or that is detrimental to your children.
Postnuptial Agreements’ legal position has been strengthened since 2008 following a Privy Council judgement. The court may choose to ignore the terms of the agreement if you or your partner do not provide full and frank financial disclosure, the terms are not fair and/or both parties have not had independent legal advice on the terms of the agreement. Postnuptial Agreements can and often are enforced by the courts in a similar way to separation agreements.
It’s important to point out that if you amend a pre-nup agreement after you are married it therefore becomes a postnuptial agreement and in turn more likely to be enforceable by the courts.
Do Postnuptial Agreements Protect You?
Postnuptial agreements help provide more certainty to couples about how assets would be divided in the event they separate or divorce. This clarity can be beneficial, especially if you have been married before and have children from a previous relationship.
This is particularly true if you are having marriage difficulties. Considering a Post-Nup when going through a period of emotional uncertainty does not always put you in the best mind-set to make a decision. You may find yourself agreeing to a lower settlement in order to remain in a marriage. Before going ahead with a post-nup, you should have an in depth and open discussion with your partner. It is good to reach an agreement on how to split assets before taking it any further.
One of the more common situations when PostNuptial agreements are used is when a couple break-up and get back together. In these circumstances, it offers some form of protection if things go wrong again. It can also form a part of a reconciliation process to help save a marriage.
Like prenuptial agreements, spouses can benefit from getting a postnuptial agreement for different reasons, many of which revolve around the property and financial rights of the parties. Often, a significant life event might prompt a couple to form a postnuptial agreement.
A couple might be interested in getting a postnuptial agreement regarding issues that do not involve financial rights or obligations. Generally, the provisions of a postnuptial agreement are valid unless they violate public policy or would alter legal relationships.
Restrictions on Postnuptial Agreement Terms
For the most part, the law affords a married couple broad leeway to enter into an agreement with each other. However, provisions that are considered contrary to public policy or that adversely affect the legal relations between spouses are not enforceable in court. For example, an agreement that obligates either party to engage in unlawful or criminal acts.
Agreements that are generally unenforceable for as contrary to public policy include:
- Contracts for paid companionship
- Certain limitations on spousal support
- Agreements adversely affecting child support
- Certain provisions regarding marital faithfulness
- Agreements promoting divorce
Enforcement
The provisions of a postnuptial contract can be enforced by filing a lawsuit based on a breach of the agreement’s provisions. A party defending against an enforcement lawsuit can avoid the application a postnuptial agreement’s provisions by claiming that the agreement was the product of undue influence, fraud, or other circumstances suggesting that they did not voluntarily agree to its terms.
The following evidence can be used to prove undue influence or other breaches of a fiduciary duty between spouses:
- Lies or misrepresentations to the other spouse
- Hiding assets or understating their value
- Threats of violence
- Evidence that the disadvantaged party was disabled in incapacitated
- Exchange of property for inadequate consideration in the absence of mutual assent
- Ignorance of the disadvantaged party concerning their rights
- A spouse’s habitual dependence on the other for guidance in a harmonious marriage
Cohabitation agreements work in the same way as nuptial agreements, but tailored for those who are not getting married.