Postnuptial Agreements: Why More Married Couples Are Choosing to Plan Ahead

Postnuptial agreements are becoming an increasingly common feature of modern married life.

While most people have heard of a prenuptial agreement, fewer realise that couples can also enter into an agreement after they are already married.

A postnuptial agreement (often referred to as a “postnup”) allows a married couple to record how they would intend their finances to be dealt with if their marriage were to break down in the future.

Why would a married couple need a postnuptial agreement?

There are many reasons why couples choose to enter into a postnup, and it does not necessarily mean that they are expecting their marriage to end.

Circumstances can change significantly during a marriage. For example, one spouse may:

• receive or expect a substantial inheritance;

• acquire or develop a business;

• receive significant family wealth;

• wish to protect assets acquired before the marriage;

• have children from a previous relationship whose inheritance they wish to protect; or

• simply want greater financial certainty for the future.

A postnuptial agreement may also be useful where a couple intended to enter into a prenuptial agreement before marrying but did not have sufficient time to complete one, or where an existing prenuptial agreement needs to be reviewed following a significant change in circumstances.

For some couples, agreeing financial arrangements at a time when the relationship is good can be considerably easier than attempting to resolve those issues following a separation.

Are postnuptial agreements legally binding?

In England and Wales, postnuptial agreements are not automatically binding on the Family Court in the same way as an ordinary commercial contract.

Importantly, a married couple cannot simply agree between themselves that the Family Court will have no power to consider their finances in the event of divorce.

However, this does not mean that a postnuptial agreement has no legal value.

The courts can attach very significant weight to a properly prepared nuptial agreement. The key principle established by the Supreme Court is that the Court should generally give effect to an agreement which has been freely entered into by both parties, with a full appreciation of its implications, unless it would be unfair to hold them to it.

In practice, this means that a carefully prepared postnuptial agreement can have a significant influence on the financial outcome if the marriage later ends.

What makes a postnuptial agreement more likely to be upheld?

Every case will depend upon its own circumstances, but important considerations include whether:

• both parties entered into the agreement freely and without pressure;

• each party understood the effect of the agreement;

• there was appropriate financial disclosure;

• both parties had the opportunity to obtain independent legal advice;

• the agreement was fair when it was entered into; and

• it remains fair in the circumstances existing at the time of divorce.

The needs of either spouse and any children will remain particularly important. A postnuptial agreement which would leave one party unable to meet their reasonable needs is much less likely to determine the eventual outcome.

For this reason, a postnuptial agreement should not simply be viewed as a way of ensuring that one spouse “keeps everything”. It should be carefully tailored to the couple's individual financial and family circumstances.

Is a postnup only for wealthy couples?

Not necessarily.

Although postnuptial agreements are frequently associated with significant wealth, businesses and inherited assets, they can be useful for many different families.

Ultimately, their purpose is certainty.

Putting an agreed financial framework in place can help couples understand their respective positions, protect particular assets where appropriate and potentially reduce the scope for expensive and stressful financial disputes if the relationship later breaks down.

Thinking about a postnuptial agreement?

If you are considering entering into a postnuptial agreement, obtaining specialist family law advice at an early stage is important.

At David J Foster & Co Solicitors, our Family Law team can advise you on whether a postnuptial agreement may be appropriate for your circumstances, the provisions it could contain and the steps that should be taken to maximise the prospect of the agreement being relied upon in the future.

Contact our Family Law team to discuss your circumstances in confidence.

This post provides general information about the law in England and Wales and should not be treated as legal advice relating to any individual case.

Article by Iqra Ahmad, Head of the Family Department

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