When to consider a postnuptial agreement

While prenuptial agreements often dominate media headlines and receive extensive coverage, the rising trend and growing acceptance of post-nuptial agreements remains less commonly discussed.

Like prenuptial agreements, postnuptial agreements are not yet binding but there is a good chance that they will be upheld by the court in the event both parties receive independent legal advice, there is full financial disclosure and the terms are fair and reasonable.

There are numerous reasons to consider a postnuptial agreement. Below are some of the key factors motivating married couples to explore this option.

1. Lack of pre-nuptial agreement

Prenuptial agreements have become significantly more popular in the last 15 years following the seminal Supreme Court case of Radmacher v Granatino [2010] UKSC 42. There are many couples who may have been considering a prenuptial agreement at the time of marriage but ruled it out for various reasons. A postnuptial agreement offers another opportunity to discuss and formalise how finances will be dealt with both during the course of the marriage and in the event of a divorce.

2. To solidify a prenuptial agreement

In some cases, prenuptial agreements are an afterthought in the busy run up to a wedding which can mean there is insufficient time to properly consider and negotiate terms. If there are concerns about timing, undue pressure or even possible duress—all of which can affect the enforceability of a prenuptial agreement in court—couples are often advised to enter into a postnuptial agreement on the same terms. This process is typically straightforward and such agreements are often finalised shortly after the wedding.

3. To rebuild trust

Another reason why a couple may consider entering into a postnuptial agreement may be that there have been difficulties in the marriage. For example, a lack of trust or disagreements regarding money which have made one or both parties feel less secure. The process of negotiating a postnuptial agreement can offer a more formal forum for a couple to have difficult conversations about the treatment of finances both current and future. This can give couples security that if the worst happens, there is a plan and they both have clear expectations as to how division of assets may take place.

4. To safeguard the transfer of intergenerational wealth

Another trigger can be if one or both of the parties are due to receive anticipated inheritance or gifts from family. In many cases it will be the family of the recipients of the inheritance or gift who urged them to seek advice to ensure that the wealth passing down the generations is preserved so far as possible and kept within the family.

The Birketts’ View

Postnuptial agreements can be useful tools to ensure clarity and transparency with regards to financial issues throughout the marriage but also in the event the marriage does not subsist and save considerable legal costs negotiating or litigating on those issues in the future when communication may not be as good between the parties. Please contact Jennifer Headon for further advice about prenuptial or postnuptial agreements.