Pre- and Post-Nuptial agreements

Nuptial agreements

A nuptial agreement allows couples to set out how their financial affairs shall be managed and how their assets shall be divided, should they divorce or the civil partnership be dissolved.

Terminology

  • If such an agreement is made before marriage, it is known as a pre-nuptial agreement (pre-nup) or ante-nuptial agreement.
  • If the agreement is made during marriage, it will be known as a post-nuptial agreement (post-nup).
  • If the agreement is made before entering into a civil partnership, it is known as a pre-civil partnership agreement or pre-registration agreement.
  • If it is made during the civil partnership, it is known as a post-civil partnership agreement or a post-registration agreement.

Contents

The agreement might cover one or both of:

  • the financial arrangements during the marriage or civil partnership; and
  • what should happen on divorce or dissolution.

Legal status

Where a couple decides to divorce or dissolve their civil partnership and cannot agree on finances, the issue can be referred to the Court to make a decision. Under Section 25 of the Matrimonial Causes Act 1973, the judge can consider all the relevant circumstances of the case before deciding how to split the finances. This means that the pre-nuptial cannot override the judge’s discretion to make whatever decision they consider appropriate.

The pre-nuptial agreement is one factor that the judge can consider as a ‘relevant circumstance’ and in fact, such agreements will often have a substantial influence. In the 2010 case of Radmacher v Granatino, the Surpreme Court said that courts should give effect to agreements where they were freely entered into by each party with a full appreciation of the agreement’s implications – unless there are circumstances that exist which would make it unfair to hold the parties to what they have agreed.

Since that case, the Law Commission conducted a review of pre nuptial agreements and made a number of recommendations. Solicitors should follow these recommendations as far as possible to increase the likelihood that the terms of the agreement will be respected. These include:

  • Ensuring both parties have received independent legal advice from a suitable lawyer, which should be arranged well in advance of the ceremony to allow proper time for negotiations.
  • Finalising the agreement well before the ceremony (at least 28 days – the complexity of the agreement will be a factor here).
  • Ensuring both parties understand the implications of the agreement by providing appropriate advice and including a warning on the agreement in clear language.
  • Ensuring as far as possible that the parties have equal bargaining power.
  • Ensuring neither party is pressurised into signing (either by the other party, or some other person such as a family member).
  • Ensuring each party makes a full disclosure of their financial position, including any interests under trusts and likely future inheritances.
  • Ensuring that the agreement does not prejudice the needs of any current or future children of the family.
  • Including a review clause which states the circumstances under which the agreement would be revisited (example: the birth of a child or after a period of time)
  • Ensuring that the agreement is generally fair – for example, it meets both parties’ financial needs and does not cause any significant hardship.
  • Any property that is to be deemed ‘non matrimonial’ (and therefore not subject to division on divorce or dissolution) is to be set out clearly in the agreement.

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