What is a post-nuptial agreement and do I need to have one?

Andy Stynes looks at post-nuptial agreements; discussing what they are, how they're used and whether you need one.

Post-nups: Quick Links

This article is quite long and comprehensive, so we've provided some quick links so you can find what's relevant to you quickly.

• What is a post-nuptial agreement?
• When is a post-nuptial agreement used?
• Is a post-nuptial agreement legally binding?
• Post-nuptial agreements: What factors do the courts consider?
• Do I need a post-nuptial agreement?
• How to set up a post-nuptial agreement
• How much does a post-nuptial agreement cost?
• How can a post-nuptial agreement be used when buying property?

What is a post-nuptial agreement?

Married couples/civil partners can decide that they may wish to enter into an agreement which will set out what is to happen with their finances in the event of their separation.

When is a post-nuptial agreement used?

A couple could choose to enter into such an agreement for various reasons. For example:

• Organisation – Being as organised as possible with finances, especially if there are multiple assets between parties
• Asset value – One party has greater capital than the other
• Inheritance – If either party has children from previous relationships and wish to protect assets for them
• Definition – If there are various assets that either party acquired before marriage/civil partnership and it is agreed that those assets will not be counted as part of the ‘matrimonial pot’.

What does a post-nuptial agreement do?

The document will set out the parties’ agreement in relation to their finances and assets in light of a future separation.

Is a post-nuptial agreement legally binding?

If parties decide to later divorce/enter dissolution proceedings, post-nuptial agreements are not legally binding, so a Court is not bound by the terms of the agreement.

However, post-nuptial agreements can be persuasive for a Court if certain conditions are met. The key consideration for a Court is that the court should give effect to a nuptial agreement that is freely entered into by each party, with a full appreciation of its implications unless, in the circumstances prevailing, it would not be fair to hold the parties to the agreement.

Post-nuptial agreements: What factors do the courts consider?

Factors that may help an agreement be more persuasive for the Courts:

• If both parties have received independent legal advice before entering the agreement
• If both parties have taken part in full financial disclosure before entering the agreement – essentially allowing both parties to say that they have had as much information as possible to make the decision as to whether to enter into the agreement
• If the terms of the agreement are fair
• Neither party was pressured or forced to enter into the agreement
• Both parties intend to be legally bound by the terms of the agreement.

Another important consideration that must be taken in account is whether there are any children. Children under the age of 18 are a top priority for a Court in ensuring that any financial agreement put in place does not prejudice the children in any way.

Consideration must also be had when entering into the agreement even if there are no children at that time but allowing for a review clause to review the terms of the agreement if this position changes.

The parties circumstances at the time any agreement is being considered by the Court are taken into account so if either parties’ position has changed considerably since entering into the agreement, this may affect whether the Court will uphold the terms, or if they feel it is now a potentially unfair agreement.

Do I need a post-nuptial agreement?

It is not necessary to have an agreement in place; however it can help provide clarity for the parties should they later decide to go their separate ways.

Should I get a post-nuptial agreement?

If there are certain assets that you want to try and safeguard, or you have children from a previous relationship that you would like to protect, then entering into an agreement of this nature may be something to consider.

What is the difference between a post-nuptial agreement and a Declaration of Trust?

A Declaration of Trust sets out the legal and beneficial owners of a property and what percentage of the legal and beneficial interest each party holds.

Post-Nuptial Agreements can cover more than just property, for example:

• Pre-marital property can be dealt with
• The family home
• Money
• Inheritance rights
• Arrangements regarding any children
• Pensions
• Debts

And anything else that a couple may wish to set out in the agreement.

If you’re considering your options and would like to learn more about Declarations of Trust, you can read our DoT article here.

How can a post-nuptial agreement be used when buying property?

If you are buying property with somebody who is not your spouse/civil partner, then it is worth thinking about getting an agreement in place setting out that the other has no rights/interests in relation to that property.

What agreement would be more appropriate to put in place will depend on the particular circumstances and what the parties wish to achieve by putting the agreement in place.

At Frettens, we can discuss your specific circumstances over a free initial chat.

Post-nuptial agreements and estate administration

In the agreement, you could include that you will not pursue a claim on any inheritance that either of you may receive in the future, or that you will not pursue a claim against the others estate in the event that they were to pass away.               

In order to ensure that your wishes are carefully and clearly set out, you should consider making or updating your Will to ensure your wishes are reflected. It is important to note that if anything happened to either party, and you were still legally married, the surviving party may inherit and/or be entitled to make a claim against that parties’ estate.

If you have any related inheritance queries, please get in touch with a member of our Wills & Estate Administration team.

Related Article: Can an ex-spouse claim against an estate?

What are the alternatives to a post-nuptial agreement?

If the concern is about property and nothing else, then a Declaration of Trust may be the more appropriate option. However, as mentioned earlier, the Declaration of Trust will only set out the legal and beneficial interest that the parties have. A post-nuptial agreement can cover a wider range of matters.

How to set up a post-nuptial agreement

It is a fairly straightforward process to get a post-nuptial agreement in place, especially if the terms of the agreement have already been agreed between the parties.

Your solicitor will need to know the particular details of the agreement reached so that they can be drafted into the nuptial agreement format.

How much does a post-nuptial agreement cost?

Most lawyers will charge for work on a time costed basis based on the lawyer’s hourly rate. It is difficult to say how much drafting putting in place an agreement may cost as it entirely depends on how much is going into the agreement, and the potential complexity of it. However, we will take the relevant information from you in our initial free consultations and we will be in a position to provide you with an estimate of costs.

To discuss costs further, you can contact our Family Team here.

Is it too late to sign a nuptial agreement?

If you are thinking about entering into an agreement prior to your marriage or civil partnership, then any agreement should be signed by the parties no less than 28 days before the date of marriage or civil partnership.

By entering into the agreement well in advance of any pending date, then this should help to avoid any arguments on a potential separation that one party was ‘forced’ to sign the agreement, otherwise the ceremony would not have taken place.

What separate property can I protect from my spouse/civil partner in a nuptial agreement?

In a nuptial agreement, parties can agree to separate any property they wish to do so. Usually, parties regard ‘separate’ property as property that was acquired pre-marriage/civil partnership or post separation.

However, if the Court does not believe an agreement is fair, or there is not enough in the marital pot to meet the parties’ needs, other property that either party has acquired separately from their spouse/civil partner may need to be included.

When looking at financial matters between parties, the court will always bear in mind the Section 25 Factors. These factors are set out in this article.

Do we both have to obtain independent legal advice to enter into a nuptial agreement?

Whilst it is not a legal obligation on both of you to obtain independent legal advice, it is highly recommended that you do. In order for the Court to place as much weight as possible on the agreement, you must be able to show that both parties fully understand the contents of the agreement and what the terms mean.

If you have both received legal advice, this helps to prove that you were both fully aware of what you were signing up to. If a party has not taken advice, this could leave to an argument later on that they didn’t fully understand what they were signing up to and argue that the agreement is unfair on this basis.