*

 

Prenuptial and Postnuptial Agreements

Prenuptial and Postnuptial Agreements

01 May 2019 Mary McEvoy

For many years, lawyers have advised their clients that there was no point in drawing up prenuptial agreements before the couple married or agreements to regulate their finances after they married.  This was because divorce courts would not be bound by them. 

Since 2010, divorce courts have been prepared to give effect to a nuptial agreement that is freely entered into by each party fully understanding the implications, unless it would be unfair to hold the parties to that agreement.

As a result of the courts’ changed approach and social changes, more couples are seeking a formal agreement either prior to marriage or after marriage. 

What is a Prenuptial Agreement?

It is an agreement entered into in advance of a marriage which sets out the arrangements the parties intend to make.  It can outline arrangements for living together during the marriage but more usually identifies assets and income and the division of those assets and income in the event that the marriage ends. 

What is a Postnuptial Agreement?

A postnuptial agreement is entered into after the marriage but in all other respects is very similar to a prenuptial agreement.

Who should consider entering into a Nuptial Agreement?

  • Where there is a significant differential in capital or income, parties may wish to have a clear understanding of how that capital or income will be shared between them in the event of the marriage ending.  This avoids the uncertainty and cost which can apply to court proceedings to resolve such issues.
  • Where one party has received financial support from their family, they and the family may wish to ring fence those contributions.
  • Where parties are marrying later in life, they may wish to preserve the assets which they bring into the marriage.
  • Where there are children from previous relationships, a nuptial agreement can identify assets which will be set aside for those children.
  • Nuptial agreements can provide for housing need in the event of a separation, identifying which party will remain in the family home or that the home will be sold and replaced with other accommodation. 
  • Where there is a business which in which one party has an interest.  They may have built the business up themselves; the business may predate the marriage; or there may be risks associated with the business which they wish to protect their spouse from as much as possible.
  • Parties may have business partners who may be concerned about investing in a business over which a spouse may make a claim.  A nuptial agreement may reassure such investors and business partners. 
  • Parties who have previously experienced a divorce may be unwilling to commit to a marriage unless they can protect themselves from risks and uncertainty.

Take legal advice in good time

You should take legal advice early.  Ideally, if you take advice at least six months before the date of the marriage, this will give your advisers and you time to properly consider a range of issues.  You may need financial advice or tax advice, as well as legal advice.  If you at least take some initial advice early, you can prepare the information which your lawyer will need in good time. 

Prenuptial agreements should be signed at least 28 days before the wedding so as to avoid the risk of signing under duress which could invalidate the agreement.  Where couples leave it too late to sign 28 days ahead of the wedding, they can enter into a postnuptial agreement afterwards.  Some couples have both a prenuptial and a postnuptial agreement.

It can take your solicitor some time to properly draft your nuptial agreement.  Such agreements can be quite complicated.  Many couples assume that nuptial agreements are “off the shelf” documents, but they are not.  Each is specific to the couple involved.  It is therefore important that you take legal advice as early as possible.

Each party should have their own separate legal representation to ensure that each of them properly understands their own interests in the matter and how their circumstances will be affected by signing the agreement.  If one of the couple signs the agreement without taking legal advice, this may weaken the strength of the agreement as they may not have properly understood the very significant rights which they may have abandoned by signing the agreement. 

Duress

It is important that both parties are free to enter into the agreement.  Such agreements inevitably mean that one or both parties are conceding certain rights, so may be worse off as a result of entering into the arrangement.  Provided the parties understand that that is what they are doing, the agreement should be upheld, but if parties do not understand that, this may invalidate the agreement. 

Is a Nuptial Agreement binding?

The agreement should be binding, but a divorce court can consider it and if the court is not satisfied that:

  • it was freely entered into,
  • each party fully appreciated the implications,
  • in the circumstances applying at the time of the divorce it would not be fair to hold the parties to the agreement,

then a divorce court could set aside the agreement or modify it. 

How can Neves help?

At Neves we frequently draft nuptial agreements and advise on the effect of such arrangements when a marriage fails.  If you are thinking of marrying, why not have a chat with a member of our Family Team? You can get in touch at info@nevesllp.co.uk.

Related Articles and Previous Blog Posts

Prenuptial Agreements

Have you considered a Pre Nuptial Agreement?

Love may be sweeter second time round but don't count on it