Family Law Guide

Guide to postnuptial agreements (postnups)

Guide to post-nuptial agreements (postnups)

Vardags made history in 2010 as the landslide victors in the Supreme Court case of Radmacher v Granatino which changed the law on prenuptial agreements in England and Wales so that they are now enforceable unless unfair. In this case it was also held that agreements reached after the date of the marriage known as postnuptial agreements carry identical weight through the courts. It has therefore become increasingly common for parties to formalise their financial arrangements and promises to each other after their marriage to allow them a greater level of certainty and autonomy in the event of permanent separation or divorce. These agreements, together with prenuptial agreements, should be frequently reviewed with the benefit of legal advice throughout the marriage in order to ensure that they remain fair in the parties’ changing circumstances. Prenuptial and postnuptial agreements are commonly reviewed upon the occurrence of significant events such as the birth of a child, one party’s retirement, a fundamental change to the relationship or a shift in either party’s financial circumstances or if a prenup cannot be prepared in good time before the wedding.

In the event that the court is asked to look at making financial provision for each party upon divorce, the general approach will be to evaluate the assets acquired during the marriage and to divide them in a manner, which the court considers to be fair. If the needs of either party cannot be met by such a division of marital assets, then the court will look to the ‘non-marital assets’ such as inheritance or pre-acquired assets of the wealthier party in order to meet the needs of the other. Needs are generously interpreted where there is the wealth to do so and will take into account the standard of living enjoyed during the marriage.

The case of Radmacher v Granatino in the Supreme Court confirmed that postnuptial agreements are as enforceable as prenuptial agreements. You can therefore expect that a post-nuptial agreement duly executed with legal advice on both sides and with full financial disclosure to be upheld by the courts provided that the agreement remains fair in the circumstances at the date of enforcement. The Supreme Court did not define the term “unfair” but, as the case law in this area has developed, fairness is interpreted as meeting the parties’ reasonable needs. These needs can be restricted by a postnuptial agreement. It is important to ensure that it remains fair in light of the parties’ changing circumstances. Your postnuptial agreement may involve maintenance or provision of a home on trust while children are growing up.

The discretion of the courts has not been ousted altogether (and in particular the court has jurisdiction to make provision for children, which cannot be ousted).  However, the Supreme Court has gone a long way to redress the balance of power between the people and the courts by allowing people autonomy to make decisions in respect of their own finances in the event of divorce. This is an extremely valuable change to the law of England and Wales and has brought us closer in line with many other countries where postnuptial agreements are already binding, and in some cases, have been for many years.

If you are interested in discussing a postnuptial agreement please see How Vardags can help with post-nuptial agreements.