postnuptial agreement is a written contract that married couples or civil partners can enter into, which will determine how their assets, property and pensions will be divided if the marriage or civil partnership does not work out. It can also specify whether maintenance will be paid by one person to the other.

Whether you are helping to fund a deposit on a house under the Help to Buy scheme, putting capital into a business venture, passing on family heirlooms, land or just handing out an early inheritance, you will want to see that your hard-earned cash is protected. Encouraging your child to sign a postnuptial agreement might save them from unnecessary heartache and financial disputes in the long-run.

It is important to remember that the situation can change at any time during the marriage. What may seem fair at the beginning of a marriage when there are no children may seem very different when a family breaks up.

A postnuptial agreement can cover in detail what will happen to:

  • Personal and jointly owned assets and belongings;
  • Personal and joint debts;
  • Significant gifts;
  • Inheritance received and expected;
  • Occupation of a family home or second home;
  • Ownership of property and land;
  • Business operation;
  • Spousal maintenance payments;
  • Pension splitting or earmarking; and
  • Provisions for continued support to be made in wills.

Postnuptial agreements can be particularly relevant where the financial situation has changed during the course of the marriage. This might be through a successful business venture, a windfall payment like an inheritance or lottery win, or through the generosity of a gift from one set of parents.

On divorce or civil partnership dissolution all the ‘assets of the marriage’ are usually considered to be part of a pot that can be divided between both people equally, or as decided through negotiation or by a court. Couples are encouraged by the court to use mediation as a means to reach an agreement for financial settlement. The mediation process can be equally useful in deciding the terms of a postnuptial agreement.

By recording the terms of their agreement in a postnuptial agreement, it may be possible to ring-fence certain assets received from one side of the family and protect them in the case of future relationship breakdown.

As with any contract, a postnuptial agreement may be challenged, but if certain conditions are satisfied the court is more likely to uphold it.

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