Pre and Post Nuptial Agreements. When would you use one?
Pre and post nuptial agreements (together called ‘nuptial agreements’) are agreements made either before or after marriage, setting out how the parties to a marriage will deal with some or all of their matrimonial assets. They are particularly useful for preserving assets that were acquired before marriage (for example, property, shareholdings in family companies, or particular family assets and heirlooms), and also for regulating what may occur in the future if one or both parties inherit assets and heirlooms from their own side of the family.
There have been various landmark legal cases which have opened up the ability of the Courts to deal with nuptial agreements, and in a 2010 in a ground-breaking case (Radmacher V Granatino) the Supreme Court said that, amongst other things, provided each person has a full appreciation of the implications of the agreement, then the Court should give effect to those agreements unless it would be unfair. These principles are more or less identical to the principles applied in most divorce financial settlements.
Accordingly, it is possible to make nuptial agreements either before or after the marriage, and provided that they are fair and that they also meet various other conditions and guidelines, they are likely to be enforced by the Court.
Combining the current practice and future guidelines, it is recommended that the following are observed:-
- Ensure that any agreement that you draw up is contractually valid and enforceable (there are certain legal rules to be followed before a contract becomes legally valid and it is therefore best to ensure it is drafted by a lawyer).
- Ensure that the agreement is also drawn up in the format of a deed, and is executed as a deed.
- Ensure that the agreement contains a statement signed by each party that he or she understands that the agreement will restrict the Courts’ discretion to make financial orders.
- Ensure that the agreement is not made during a period of 28 days ending on the day in which the marriage (or civil partnership) is formed.
- At the time the agreement is formed each party must have made full written disclosure of all information about their finances to the other.
- Ensure that there is an option to review the nuptial agreement at specific “trigger events” such as the birth of a child, purchase of a replacement property or, for example, every 5-10 years to ensure it remains relevant.
- At the time the agreement is formed both parties must have received independent legal advice, and a compelling statement to that effect should be contained on the face of the agreement.
- No party should have been forced to entered into the agreement.