There is an increasing trend in the UK of married couples considering and entering into a postnuptial agreement. Whilst many couples have historically been aware of the existence of prenuptial agreements, postnuptial agreements had been far less popular and were often overlooked. Sadly, divorce is now very common, with 42% of all marriages in the UK ending in divorce.
What is a nuptial agreement?
Nuptial agreements include both pre and postnuptial agreements, which are effectively contracts being entered into by spouses, or future spouses, seeking to determine how their assets should be divided in the event of a divorce in the future. Although they are not strictly binding within the courts of England and Wales (which is unlike some other jurisdictions), the law has developed significantly since the Supreme Court decision in the case of Radmacher v Granatino in 2010 and they carry significant persuasive weight.
Whilst it is not possible to oust the jurisdiction of the court by entering into a nuptial agreement, they are considered a relevant circumstance of the case, that must be considered by the Judge. Nuptial agreements will influence a Judge’s decision as to how finances should be divided in the context of divorce and what outcome should be considered ‘fair’.
Provided the following criteria is met, there is a real likelihood that the agreement will be upheld by the court:
- The agreement must be freely entered into;
- The parties must have a full appreciation of the implications of the agreement;
- It must be fair to hold the parties to the agreement in the circumstances.
They are particularly flexible documents that can cater for each couple’s specific needs and can deal with matters such as how assets such as property, pensions and investments should be divided, whether there should be any maintenance payments to either party and even what should happen with any family pets.
Can I have a postnuptial agreement?
As the name suggests, a postnuptial agreement serves the same purpose as a prenuptial agreement, however it is entered into following the marriage, as opposed to before. There is often a perception that nuptial agreements are simply for the rich and famous, which traditionally, may have discouraged many people from entering into them. There are, however, many reasons why married couples are now deciding to enter into postnuptial agreements and there is no restriction on who can enter into them.
Simply because a prenuptial agreement was not entered into prior to the parties’ marriage does not mean the ship has sailed in terms of protecting assets and it is prudent to take advice as to whether or not an agreement would be appropriate.
Why are postnuptial agreements becoming more popular?
There are numerous reasons why postnuptial agreements are becoming increasingly popular. Whilst the list below is not exhaustive, it sets out some of the common situations when postnuptial agreements are looked at.
Changes in financial circumstances
A married couple’s future financial position is rarely certain. There can be significant changes in financial circumstances and postnuptial agreements can be used to ensure the parties have clarity as to how they wish to deal with any changes in their financial circumstances as their marriage progresses. For example, there may be debts accrued, business interests or inheritances that the parties may wish to protect and agree the treatment of in the event of a separation which otherwise, without the existence of a nuptial agreement, may be dealt with by the court in an entirely different way.
In the current financial climate, it is increasingly common for couples to need to rely on family members for financial assistance, which may be unmatched from the other party’s side of the family. For example, many couples rely on help to be able buy or improve a property, pay for their children’s school fees or maintain a higher standard of living. Families may also want to pass assets such as, property, farms and business interests down generations whilst they are still living, particularly when considering inheritance and tax planning. Under those circumstances, postnuptial agreements can be a very sensible option to protect the contributions by one side of the family, for the benefit of future generations.
Discussing nuptial agreements may historically have been considered a somewhat taboo subject, however with an increased awareness of nuptial agreements and the benefits they can provide, it is now relatively common for the member of family wishing to pass assets down, to prompt the conversations regarding postnuptial agreements to preserve the family wealth for future generations.
Second Marriages
As above, the rates of divorce are high, with almost half of all marriages now ending in divorce. Whilst divorces in the distant past were relatively uncommon, couples now separate far more frequently and at younger ages, meaning the likelihood of individuals entering into subsequent marriages and blending families is far greater. With this in mind, more couples are considering a postnuptial agreement to ensure the assets they have brought to the marriage or may acquire from their own endeavours, are protected for the benefit of their own children or family, rather than being lost as a result of a further separation.
Financial Certainty
Each couple will manage their finances in their own way, however differences in opinion as to how finances should be utilised or ultimately shared can lead to conflict and in extreme circumstances be a catalyst for separation or divorce. More couples are now recognising that having a postnuptial agreement can avoid all the potential conflict through both parties having the financial security of knowing their respective intentions and the financial outcome if they do ultimately separate.
Divorce proceedings are also notoriously expensive if there are large areas of dispute. By entering into a nuptial agreement, the couple are likely to limit the disputes that may arise and avoid costly litigation in the future.
Financial Transparency
In the past, discussions about finances between couples was less common. In many families, the bread winner may not have shared their full financial information with their partner, or the home maker may not have asked questions regarding the same. Now, it is commonplace for both parties in a marriage to fully understand each other’s financial position, openly discuss what they contribute and budget collectively. The more open approach has led to a greater number of discussions about how finances can be divided in the event of separation. This in turn has led to more nuptial agreements being entered into.
Conclusion
Postnuptial agreements are on the rise and there is no indication the trend will stop any time soon. It is far more likely that, as time goes on, such agreements will carry even more weight and there are many reasons why couples may wish to enter into them.
It is imperative that careful consideration is given to nuptial agreements and expert advice taken to ensure they carry as much weight as possible and to achieve the desired outcomes. At Stephens Scown we have a highly experienced team, dedicated to such agreements with a wealth of knowledge on the subject. Contact us today by phone: 0345 450 5558 or by email: enquiries@stephens-scown.co.uk