Most people have now heard of a pre-nuptial agreement that sets out division of assets and what will happen in the event of a split. Pre-nuptial agreements are often regarded as unromantic and so many people refuse to sign them before a wedding takes place. Often this leads to regret – which is why the post-nuptial agreement is worth considering.
What is a post-nuptial agreement?
It’s a written contract between a married couple that can cover a wide range of issues and assets that will need to be dealt with if the couple ever splits. In 2008, in the case of McLeod v McLeod, the Privy Council decided that a post-nuptial agreement that had been signed after the marriage or civil partnership had taken place could still be binding in the same way as a pre-nuptial agreement. It’s worth noting that the courts are not automatically bound by the terms of a pre-nuptial agreement and so wouldn’t be by a post-nuptial agreement. However, the courts are increasingly starting to take these contracts into account, depending on the circumstances of an individual case.
What does a post-nuptial agreement cover?
The breadth of a post-nuptial agreement depends on the range of issues that the circumstances dictate. This could include any of the following:
· How any future inheritance received by either person will be handled
· How property already owned by individuals will be divided
· How property already owned jointly will be divided
· What happens with life insurance
· The division of any pension assets
· Arrangements for any spousal maintenance that will be put in place
· How assets that are purchased after the agreement is signed – either individually or jointly – will be divided up
· Dealing with existing or future debts, whether they are jointly or singly incurred
· Whether there will be any Will bequests and the details of what those might be
How to ensure a post-nuptial agreement is legally binding
As post-nuptial agreements are not automatically legally binding, there are steps that need to be taken to ensure that the contract has the best possible chance of being upheld by the courts, including:
· Both parties obtaining independent legal advice from different solicitors
· Starting with an open and frank discussion of all the assets that you have as a couple, and as individuals, and making a list of those assets and their history and value
· Ensuring that the agreement does not seek to exclude the possibility of one person paying child maintenance in the future as a result of division of assets
· Adding a clause that triggers review of the agreement at various key moments in life, such as having children.
· Ensuring that the agreement is not manifestly unfair to one person or other in terms of the way assets are divided
Although the courts don’t have to uphold a post-nuptial agreement, they are increasingly likely to do so and, as a result, these contracts are much more relevant than they used to be. Clear agreement like this also provides a great way to help manage assets with perspective during what can often be a confusing and upsetting time.