POSTNUPTIAL AGREEMENTS

Postnuptial agreements are not as common as prenuptial agreements as couples haven’t heard about them as much. Postnuptial agreements are the same type of document as a prenuptial agreement but just signed after the marriage.

Prenuptial and postnuptial agreement solicitors are often asked who signs a postnuptial agreement. The answer is that in many scenarios a postnuptial agreement is discussed by a happily married couple when there is a potential change in one or both of their circumstances, such as the receipt of a legacy or a parent wanting to transfer assets to the younger generation. A postnuptial agreement prepared by specialist postnuptial agreement solicitors is just sensible planning, in the same way as preparing a Will, taking out an insurance policy or signing a lasting power of attorney.

What’s the point of a postnuptial agreement?

Postnuptial agreements are agreements drawn up during a marriage to record what you have agreed about the division of family assets if you split up in the future. The agreement is intended to limit financial claims if a married couple split up to an agreed amount (or percentage of all or some of the assets) or to ring fence some assets, such as inherited money.

Most people don’t realise that after marriage a spouse can make claims for spousal maintenance, cash, property and pensions. A postnuptial agreement sets out how you plan to sort things out if there is a future separation. The agreement can be detailed or not, depending on your preferences. The postnuptial agreement is intended to give you both peace of mind so that you both know where you stand financially.

What happens if we don’t have a postnuptial agreement?

If you don’t have an agreement in place then if you split up either one of you could bring financial claims. The claims could be over assets owned by one of you prior to the marriage or inherited money or family gifts of cash. Without a postnuptial agreement in place these assets are more vulnerable as the start point for dividing the assets would normally be that everything should be split equally. The eventual outcome might be more or less than fifty percent depending on needs, length of the marriage and many other factors. That is why, in some family situations, prenuptial and postnuptial agreements are a sensible option. The costs of sorting out the split of money and assets on divorce is likely to be a lot higher if you don’t have a prenuptial agreement or postnuptial agreement in place because one or both of you may feel angry or hurt at the time of separation and therefore not able to agree on what would be a fair split of assets.

Who should sign a postnuptial agreement?

Anyone who is anticipating a change in personal or financial circumstances should consider a postnuptial agreement and get some legal advice from postnuptial agreement solicitors on whether an agreement would be a worthwhile exercise for you. Evolve family solicitors will look at your current personal and future financial circumstances, for example with a postnuptial agreement in place parents or extended family may feel more comfortable about starting to gift money to you during their lifetimes to reduce their eventual inheritance tax bill.

As a rule of thumb, a postnuptial agreement may be a sensible option if one or both of you:

  • is a business owner or holds shares in a family company;
  • is a beneficiary of a discretionary trust fund , whether or not the fund has in the past or is currently making income or capital distributions;
  • is likely to inherit money;
  • is likely to receive substantial gifts from parents or extended family as part of their inheritance tax planning;
  • parents have or want to put their property in the name of you and your siblings;
  • have been married before or have children from previous relationships. This is especially important if you didn’t get a financial clean break order from a former spouse;
  • would like a measure of certainty about how things will be sorted out in the event of a separation and would want any split to be amicable and civilised.

The best advice is to ask whether a postnuptial agreement is likely to be of benefit to you. As specialist postnuptial agreement solicitors, Evolve can tell you whether a postnuptial agreement would be a good idea and advise you on your options.

What is essential for a postnuptial agreement?

  • financial disclosure;
  • independent advice;
  • the agreement is fair to both of you and meets your needs.

My spouse doesn’t know how wealthy my parents are or about their intended gift of money to me. If I do a postnuptial agreement will I have to say what my parents plan to give me?

This is often a quandary for people whose spouse doesn’t know about the existence of family wealth or trusts. For a postnuptial agreement to carry weight the two of you need to know what the other has or may get in the future, for example as a result of a gift, legacy or trust distribution. This is because in order to come to an informed agreement and take advice you both need to know the other’s circumstances.

Most people recognise the need to give information about finances in the agreement as in that way it will carry greater weight.

My fiancée doesn’t know how wealthy I am. If I do a prenuptial agreement will I have to say what I own?

Yes, you do. If a spouse doesn’t get their own separate legal advice from postnuptial agreement solicitors on the agreement then it will carry less weight. The agreement is an important legal document, and just in the same way that you need a solicitor to sort out the preparation of your will or lasting powers of attorney, you both need postnuptial agreement solicitors to advise you on the postnuptial agreement. There are normally a lot of options on what can go into the agreement and so you both need advice.

Many married couples are fearful about raising the topic of a postnuptial agreement and of asking specialist postnuptial agreement solicitors to get involved with the drawing up of the agreement as they naturally don’t want any disagreements with their spouse or their extended family. That is totally understandable and the job of a specialist postnuptial agreement  solicitor is to make you aware of what can go in the agreement, what may be good options for you and to sensitively finalise an agreement that works for both of you .

My spouse doesn’t want any of the money my parents are going to give me if we split up. Can the postnuptial agreement say that?

The postnuptial agreement can say that but, depending on yours and your spouse’s financial circumstances it may be in your interests for the agreement to record that your spouse will get sufficient to meet their needs. This is because even if your spouse knows how much you are worth, and has their own postnuptial agreement solicitor, the agreement has to be fair and meet both of your needs. The postnuptial agreement may be ok if you are only married a very short period but if you have children together or enjoy a long marriage the postnuptial agreement may not be considered to be fair and therefore carry less weight. An agreement is still appropriate as it limits the financial claims. That is why it is important to get specialist postnuptial agreement advice on what should go in the agreement so that the document is as effective as possible in protecting family wealth.

The family company shares are owned by me. Why do we need a postnuptial agreement if they are my shares and we have a shareholder agreement?

When a couple get married a spouse is automatically entitled to make financial claims on separation, including claims over property, shares, investments, cash, pensions and businesses owned by one spouse. They can also ask for maintenance. That means sole ownership of a property doesn’t protect it from claims on divorce. The postnuptial agreement is designed to stop or limit those claims.

A shareholder agreement can be drawn up to regulate how the company operates and shareholders work together. Even if your spouse is a shareholder in the company the shareholder agreement won’t stop them from being able to bring financial claims on divorce that could financially damage the company. A carefully prepared postnuptial agreement can complement the shareholder agreement.

Do I need a postnuptial agreement as I have now been named as a potential beneficiary of a trust? Does the trust protect the family money?

A trust is a very useful means of protecting family wealth but it is only one protective measure. Most trustees would always recommend that a beneficiary of a discretionary trust fund should also have a postnuptial agreement prepared by specialist postnuptial agreement solicitors. That agreement can clearly record that any trust money is ring fenced and protected from any claims on divorce.

We own property abroad. Do we need a postnuptial agreement in the UK as well as where we own the property?

Possibly. A lot will depend on where the property is owned and by who. Robin Charrot is a Fellow of the International Academy of Family Lawyers, the world’s leading organisation of expert international family lawyers and he works with specialist prenuptial and postnuptial agreement solicitors in different countries where there is potentially a need for more than one agreement to make sure that you are protected.

My spouse isn’t a British citizen. Where should we sign a postnuptial agreement?

If you are living in the UK and have property in the UK, then probably in the UK but much will depend on your individual personal and financial circumstances. In some family situations couples elect to sign mirror agreements to cover the possible multiple jurisdictions as a result of international connections or wealth. In any situation where there is any possibility of a choice of or different jurisdictions it is vital to get expert advice from postnuptial agreement solicitors as not doing so could have a tremendous impact on whether or not the postnuptial agreement is effective and the cost of a divorce.

We have a postnuptial agreement but circumstances have changed. Do we need to do anything?

Possibly. In much the same way as wills are relooked at or the amount of insurance is checked it is always sensible to periodically consider if a prenuptial or a postnuptial agreement needs to be changed. Evolve postnuptial agreement solicitors can look at the agreement and check that it still meets your respective needs.