A postnuptial agreement (post-nup) is an agreement between a married couple about what would happen in the event of divorce; primarily addressing the financial claims that may arise on divorce.
When considering a financial claim on divorce, even in the presence of a post-nup, the starting point is section 25 of the Matrimonial Causes Act 1973 which obliges a judge to consider all the relevant circumstances of the case when deciding how to divide the parties' finances.
Interestingly, no agreement between the parties can override the legislation or prevent a judge from deciding on the appropriate division of assets on a divorce. This means a post-nup cannot stop a spouse applying to the court for financial provision from the other spouse. In addition, any waiver of the right to apply to the court for financial provision in an agreement will not be effective. In short, post-nups are not binding. However, that is not to say that they are not a highly effective wealth management tool as in the vast majority of circumstances they will be followed and upheld.
In practice, the existence of a post-nup is a relevant circumstance that the court must consider and how much weight is to be attached to it is something that a judge will need to decide.
Helpfully, the Supreme Court set out the following test for post-nups in the landmark case of Radmacher v Granatino:
The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances it would not be fair to hold the parties to their agreement.
Let’s examine the three elements of the test:
1. Agreement must be freely entered into- a post-nup is unlikely to be upheld if the court finds evidence of mistake, duress, undue influence, misrepresentation or unconscionable conduct (commonly known as vitiating factors), such as exploiting a dominant position to secure an unfair advantage or coercive and controlling behaviour.
2. Parties must have a full appreciation of the implications of the agreement- both partiesshould be in possession of all the information material to their decision to sign the post-nup before signing it, so that they fully understand the implications of the agreement. To assist the parties in fully understanding the implications of the post-nup, they should both receive specialist family law advice.
3. It must be fair to hold the parties to the agreement in the circumstances prevailing- whether it would be fair to hold the parties to their agreement depends on the facts of the particular case, for example, does the post-nup prejudice the reasonable requirements of any children of the family? Does the post-nup unfairly ring-fence certain assets? Does the post-nup leave one party with less than their needs, while the other party is comfortably provided for? Please note that this is not an exhaustive list. Expert guidance is likely to be needed to consider properly whether an agreement is likely to be considered to be fair.
If you find that you and/or your spouse have reached a point in your marriage where either of you are considering entering into a post-nup then, we, the family law team at Boyes Turner can advise you in detail about all things post-nups from a legal and practical point of view.
Please do not hesitate to contact a member of our specialist family law team should you require our assistance.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.