Pre-Nuptial & Post-Nuptial Agreements
There are two types of agreements
- A Pre-nuptial agreement (‘pre-nup’) is an agreement which is entered into before marriage, which details how assets will be divided if the marriage breaks down.
- A Post-nuptial agreement (‘post-nup’) is entered into after marriage, while a couple are still living together and allows a couple to plan financially should their marriage breakdown. Civil partners can have a post-partnership agreement.
Up to recently Pre-nuptial Agreements have had little but persuasive value. Although the courts would take them into account they were not legally binding. However following the recent land mark decision by the Supreme Court of Radmacher v Granatino in Oct 2010 things are set to change. By ruling that such contracts are legally binding, the Supreme Court has altered the landscape of divorce settlements. In this case Katrin Radmacher, a German national and her French ex-husband, Nicolas Granatino, 38, had signed a prenuptial agreement before their wedding in London in 1998. The agreement stipulated that neither party would benefit financially if the marriage ended. When the parties separated in October 2006 Mr Granatino applied to the court to look at all financial matters, asking that the Agreement be disregarded. On Appeal, the Supreme Court found in favour of the wife Ms Radmacher. Lord Justice Thorpe stating “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 prevailing it would not be fair to hold the parties to their agreement”.
In terms of defining ‘fairness’, the Supreme Court has suggested that if the parties’ needs are met and financial sacrifices have been compensated for in the agreement (for example by homemakers who have given up careers to look after the children of the family), then there should be no requirement to depart from the agreement.
So when would a Pre-nuptial Agreement be beneficial?
Consider the following:
- Are you getting married or entering into a Civil Partnership?
- Have you and/or your partner a number of assets/properties that would be difficult to divide on separation?
- Do you want to safeguard inherited family money or assets?
- Do you expect future inheritance?
- Do you want to safeguard a business?
- Do you want to safeguard children within the relationship or children from a previous relationship?
The law relating to Pre-Nuptial Agreements also applies to Post-Nuptial Agreements, the only difference is that a Post-Nuptial Agreement is entered into after marriage whereas a Pre-Nuptial Agreement is arranged before marriage.
Naturally people getting married believe that they will be married for life, however today this is often not the case. Marriage breakdown has increased significantly over the last few years due to changes in society and our work-life patterns. By signing a pre-nuptial agreement before marriage, both parties know exactly where they stand in relation to asset division, should the marriage dissolve in the future.