FAQs - pre-nuptial and post-nuptial agreements

What is a pre-nuptial agreement?

A pre-nuptial agreement is a document agreed and executed by a couple before they marry setting out how they wish to divide their financial assets if they divorce in the future.

A pre-nuptial agreement will usually define what a couple wish to classify as matrimonial assets and share if their marriage breaks down. It also allows a couple to confirm what assets they would like to be excluded from the sharing principle and kept free from a financial claim. These assets are usually defined as ‘separate assets’ and can include assets which either has brought into the marriage or that they anticipate acquiring in the future such as family inheritance, shares in a company, pre-acquired property portfolios or investments.

A pre-nuptial agreement should not deal with future arrangements for children as this will be determined by what is in their best interests at the time of separation. It is also not appropriate to include different financial outcomes dependent on the reason the marriage has broken down. For example, if one spouse is deemed to be at fault for the breakdown of the marriage.

What is a post-nuptial agreement?

A post-nuptial or post-marital agreement is a document that is executed after the marriage and sets out how a couple intend to divide their financial resources (capital, income and pensions) if they divorce in the future. Many couples decide to convert their pre-nuptial agreements into a post-nuptial agreement, particularly if they entered into the pre-nuptial agreement close to their wedding day, as entering into a post-nuptial agreement can mitigate the risk of one party arguing that they felt pressured into signing the document before the wedding.

Post-nuptial agreements can also be prompted by a spouse wanting to protect wealth that is acquired during the course of a marriage such as gifted wealth (as opposed to wealth acquired as a result of their ‘joint endeavour’).

Are nuptial agreements enforceable in England and Wales?

In the case of Radmacher v Granatino [2010] UKSC 42, the Supreme Court has confirmed that a pre-nuptial agreement will have ‘magnetic importance’ if the following applies:

• the agreement must have been freely entered into by both parties;
• both 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 prevailing circumstances.

As the law stands, pre-nuptial agreements are almost as good as binding provided they are fair. However, ultimately the court still has the power to decide whether a nuptial agreement is reasonable and make different financial awards on divorce. The existence of, and substance of a nuptial agreement is one of the ‘evidential’ factors that the court considers as well as what ‘weight’ should be given to it.  For this reason, even if the court takes the view that the agreement as a whole is not binding on the parties, the outcome may be considerably swayed and informed by the provisions of the agreement in a way that there is a better outcome for the spouse relying on it (usually the financially advantaged spouse) and therefore it is often preferable to have a nuptial agreement than to have no agreement.

Who should consider entering into a pre-nuptial or post-nuptial agreement?

If you are getting married and you own assets that you do not want to share with your spouse if you divorce, you should consider entering into a pre-nuptial or post-nuptial agreement.

For example, you may wish to consider a pre-nuptial agreement if the following applies:

• you may have already built up considerable wealth;
• you own shares in a company or have an interest in a partnership and want to future proof and protect business assets generally (for future generations and/or other co-owners of a business);
• you have received or anticipate receiving an inheritance or gifts from family eg inheritance planning where there is family wealth. You may have been married before and own assets in your sole name;
• you have made unequal contributions to the purchase of the family home;
• you own an investment portfolio that has been built up prior to the marriage;
• you hold shares in a company that you wish to preserve;
• you have an interest in property or properties acquired before the marriage;
• you have built up significant pensions before the marriage;
• you are the beneficiary of a trust.

What steps should be taken before signing a nuptial agreement?

To make sure any agreement has the best chance of being upheld, it is important for both parties entering into an agreement to have independent legal advice from a specialist family solicitor to ensure the terms are understood and the implications of entering into the agreement are explained to you both in full.

Your solicitors will draft the agreement and advise you on the implications. You will need to disclose what assets you have (including details of your income and pension provision) to each other during the process. The solicitors will both sign a certificate to confirm you have freely entered into the agreement and that the terms are fully understood.

You will need to make sure that the agreement is fair. It will not be a ‘fair’ agreement (in the eyes of the family court) if the financially weaker party would be left with nothing or insufficient money or income to meet their ‘needs’ once the marriage is ended. For example, they may need capital to buy a house and maintenance for ongoing financial support, particularly if there are children. Establishing what would be fair provision at an unknown point in the future can be tricky and subjective and may involve some negotiation but it is an important aspect to ensure that the agreement is upheld. To the extent therefore that future needs must be met at a fair level, if joint assets are going to be insufficient, then separate property may need to be ‘invaded’. 

If you wish to enter into a pre-nuptial agreement, it is important that you take advice from a solicitor in good time before the wedding. This is to ensure you and your future spouse have plenty of opportunity to settle the terms of the agreement so that neither one of you is placed under any pressure which could be considered as duress to agree the terms. The Law Commission recommends that a pre-nuptial agreement is executed at least 28 days before the wedding. Ideally, you should take steps to seek advice regarding the agreement as soon as possible after your engagement as an agreement can take quite some time (in certain cases months) to negotiate. 

Will the English courts enforce the terms of a foreign nuptial agreement?

If you entered into a pre-nuptial or post-nuptial agreement in a different jurisdiction and are now living in England and Wales, or are intending to live here in the future, it is important to ensure that the agreement meets English legal requirements.  In such a situation, you should seek advice from a specialist family lawyer to ensure the nuptial agreement has the best chance of being upheld should divorce proceedings take place in England in the future. Provided both spouses agree, the agreement can be converted into a post-nuptial agreement to ensure it meets the English courts’ requirements.

If you are an international couple and you own properties in various jurisdictions, it is prudent to seek advice from a specialist family lawyer in each jurisdiction which might have grounds to deal with a divorce so you are aware of the impact of the agreement in each relevant country. It may be sensible to have mirror agreements in different jurisdictions to ensure a belt and braces approach.

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