Postnuptial Agreements FAQs
- What is a postnuptial agreement?
- When would you choose to enter into a postnuptial agreement?
- What should a postnuptial agreement contain?
- Do postnuptial agreements actually protect you?
- Are postnuptial agreements legally binding?
- Are postnuptial agreements independent to prenuptial agreements?
What is a postnuptial agreement?
A postnuptial agreement is an agreement entered into after a marriage or civil partnership is formed. It regulates the financial terms of separation, divorce or dissolution should they occur further down the line. The agreements, as already indicated, are not just restricted to marriage but can be used in civil partnerships. You may find them referred to as post-civil partnership agreements in that context.
When would you choose to enter into a postnuptial agreement?
Postnuptial agreements, like prenuptial agreements, enable you to agree the financial consequences of any future divorce or separations, so that you and your partner remove any uncertainty from your relationship.
We also see the use of postnuptial agreements when couples move to the UK from another jurisdiction and want to protect their assets and interests and gain certainty in case of a future divorce in the English courts which can often have very different outcomes to a divorce in another country.
What should a postnuptial agreement contain?
As with prenuptial agreements, postnuptial agreements don’t have to address every tiny detail of what you own and what your partner owns, but the main areas should be addressed. These are the types of areas a postnuptial agreement focuses on:
- Personal belongings.
- Debts and how these will be dealt with if the relationship ends.
- Future inheritances and how they will be split.
- Future income distribution.
- Property. How will property be split between the couple.
- Wills and Trusts.
- Ongoing Maintenance. Amounts and limitations.
Do postnuptial agreements actually protect you?
As previously stated, postnuptial agreements are not accepted as being 100% legally binding. However they do help provide certainty to couples about how assets would be divided in the event they separate or divorce. Knowing what has been agreed can be beneficial, especially if you have been previously married before or have children from a previous relationship.
There are also situations where a couple who have a volatile relationship may consider a postnuptial agreement but bear in mind that if you are having marriage difficulties, emotional uncertainty and imbalance can sometimes influence you to make bad decisions which you may regret along the line. One side or the other may also use this situation as an ‘under pressure’ defence if the agreement is triggered at a later date.
Are postnuptial agreements legally binding?
Postnuptial agreements, like prenuptial agreements are not strictly legally binding but if they are correctly drafted and obey the limitations of the format, they can prove to be very difficult to successfully challenge.
With prenuptial agreements there has always been an option for one side or the other to argue they were pressurised into agreeing to the agreement in a short time window, to avoid upsetting imminent wedding procedures.
Postnuptial agreements, in comparison, are more likely to be upheld by a court than a prenuptial agreements because of the lack of time pressures and the fact that the marriage/civil partnership is already in place.
Generally, post-nuptial agreements are not strictly binding on the court in the event of a later divorce, but it is likely that a post-nuptial agreement will be respected by the court unless the effect of the agreement would be unfair in the circumstances. It is not possible in this country to have a fully binding agreement about what will happen on divorce or dissolution.
At rhw we ensure that our clients receive thorough legal advice and are encouraged to implement full and frank financial disclosure with their partner before signing any agreement. These two cases are important in terms of understanding the enforceability of postnuptial agreements:
Hopkins v Hopkins
Mr and Mrs Hopkins were married in 2009 after living together for 8 years. By 2011 they were separated, and a post-nuptial agreement was signed by both parties in “full and final settlement of any future claims”.
At the time, the wife’s solicitor advised her strongly against signing anything until there was full and frank disclosure. However, the wife did not feel it was necessary and it is report that she was “entirely happy” with the agreement.
Sixteen months later, Mrs Hopkins realised that she needed a larger share of Mr Hopkins’ assets and she issued financial proceedings requesting a further £2 million of Mr Hopkins’ £38 million wealth.
Judge Nicholas Cusworth QC said that the post-nuptial agreement was valid. He believed that at the time, Mrs Hopkins “was rational, thoughtful, saddened by her situation, but certainly capable of independent thought”. “She knew her own mind and was keenly aware of her own objectives”, he added. “I reject the wife’s case that she was operating under any undue influence, duress or improper pressure when she entered into the post-nuptial settlement”.
Gray v Work
In Gray v Work, the couple had been married since 1992. The husband enjoyed a successful career with a private equity firm based in Texas and the wife become a stay-at-home mother to their two children.
The family lived in Tokyo, Japan, for eight years, during which time the husband made many successful investments, generating millions in profits as well as significant personal wealth. Whilst there, the couple signed a post-nuptial agreement. Unlike Mr and Mrs Hopkins, this agreement was drawn up to enable the husband to change his citizenship for tax purposes.
The couple’s marriage ended in 2013 when the wife began a relationship with another man. During the subsequent financial proceedings, the husband insisted that his estranged wife was not entitled to a full share of his wealth. His initial offer was $5,000,000, which was the value of her own property within the husband’s possession or control. It represented approximately 2% of the couple’s total joint assets of $225,000,000.
Mr Justice Holman was unconvinced. He decided that it was possible the wife may not have received proper legal advice when she signed the post-nuptial agreement, and consequently she should not be held to the agreement. He also rejected claims that the husband had made a ‘special contribution’ to the couple’s joint wealth and so was entitled to keep more, departing from the general rule that assets should be divided equally on divorce.
It was therefore decided that the matrimonial assets should be split 50/50.
Although each case had a very different outcome, there is one similarity: the clarity of whether each party received sufficient legal advice. Mrs Hopkins had many files of correspondence, showing that she had been fully aware of the implications of her agreement. Alternatively, there was seemingly little evidence of the wife in Gray v Work receiving sufficient legal advice, arguably because the agreement was for tax purposes at the time.
What can be taken away from this contradiction is that if you are thinking of post-nuptial or separation agreements, it is important that you take clear and thorough legal advice, and attempt full and frank financial disclosure before signing anything, so as to ensure the agreement is fair and will be binding in the future.
Are postnuptial agreements independent to prenuptial agreements?
Due to the fact that a post nuptial agreement will be signed after the point where a prenuptial agreement could be legally agreed (the clue is in the pre and post terms) the postnuptial agreement will practically always supersede the terms of the prenuptial agreement unless it makes specific reference otherwise.
It is worth considering again, why a postnuptial agreement is being put in place. A couple may choose to enter into a postnuptial agreement when there is concern about the strength or validity of an existing prenup. Some individuals may choose to use a postnup to reaffirm or clarify some of the points made in a prenup.
Postnuptial agreements are also useful where there has been a change in a couples circumstances since the preceding prenup was signed and the prenup no longer accurately reflects the present circumstances or wishes.
Of course, in some cases postnuptial agreements are entered into without there being a preceding prenuptial agreement. Whoever it would be very unusual to agree to a postnuptial agreement where there is a pre-existing prenuptial agreement without seeking to modify or update that agreement.