Prenuptial & Post Nuptial Agreements

A Prenuptial Agreement is an agreement entered into between a couple prior to their marriage and is useful to protect:

• Assets acquired before the marriage;
• Inherited assets & family wealth;
• Gifted assets;
• The interests of children born to each of the parties prior to marriage.

You can also enter into a postnuptial agreement, which can offer the same protection. However, a postnuptial agreement is entered into after marriage, rather than before.

• It provides clarity as to what will happen if the marriage breaks down;
• It can reduce the cost of litigation;
• It seeks to protect pre-acquired assets of the marriage and the interests of children conceived by each of the parties prior to marriage;
• It encourages those with wealth to enter into marriage knowing that they have taken steps to secure the protection of their non-marital assets, as far as is possible.  

Pre and post-nuptial agreements are not legally binding. However, the family courts are increasingly upholding the terms of an agreement in the event of marriage breakdown where the following criteria have been met:

• Each party has received independent legal advice on the terms of the draft agreement;
• There has been an exchange of full and frank financial disclosure by each party;
• Each party has entered into the agreement of their own free will;
• The terms of the agreement are fair and reasonable;
• There is enough time between the signing of the agreement and the wedding ceremony, to avoid any suggestion that either party was placed under pressure at the last minute;
• The agreement is made by way of Deed;
• The agreement is more likely to be upheld if its terms last for a specified period, such as 3-5 years, and that there is a review of terms in the event of a change of circumstances, such as the birth of a child or ill health.

An agreement created during the marriage is called a post-nuptial agreement. These agreements can be entered into during the marriage and can protect certain assets from claims by the other spouse in the event that the marriage breaks down.

They are useful in protecting inherited or business assets, especially used in conjunction with a restructure of company shares and the creation of a discretionary trust.

The creation of a trust may protect a spouse’s family wealth. Our courts have a broad discretion to vary certain nuptial settlements and can take into account the existence of a trust as a “resource” of the spouse who benefits from the trust.

The trustees of a trust, whether the trust is based here or offshore, will need to take swift expert advice at an early stage to protect all the beneficiaries of the trust, and must be advised on the extent to which they must submit to the jurisdiction of the courts of England & Wales or whether the offshore jurisdiction which governs the trust provides the trustees with local protection.

In the case of offshore trusts, it is important to obtain legal advice in this country and in the relevant overseas jurisdiction.

At Myerson, our Private Client and Family Law Specialists can advise spouses, settlors and trustees, (whether in this country or overseas), on their duties and responsibilities, and the extent to which the trust itself is vulnerable to attack upon divorce.

The Private Client Team has extensive experience in drafting trusts to ensure that family wealth is given maximum protection, and in advising clients on the most tax-efficient way to protect their wealth.

If you or your future spouse has assets overseas, it is important for you to obtain advice from a specialist family lawyer in both jurisdictions. This is because the approach for the enforcement and validity of Prenuptial Agreements varies between countries.

At Myerson, we often act for clients who have assets or properties in two separate jurisdictions. We draft and advise clients on mirror agreements to protect assets in both jurisdictions.

A Prenuptial Agreement will usually include a jurisdiction clause to set out your domicile and habitual residence, together with your intentions as to the jurisdiction in which you would issue divorce or dissolution proceedings and where you intend the agreement to be enforceable.

Where there are international elements, Prenuptial Agreements may be drafted in each relevant jurisdiction and translated and notarised if necessary.

Unlike entering into a marriage or a civil partnership, entering into a Pre-Nuptial Agreement or a Post Nuptial Agreement will not revoke or cancel an existing Will.

It is recommended that parties should execute separate wills that are consistent with the provisions of the Agreement at the same time as entering into the Agreement to ensure that the provisions of your Will are at least as generous as the provisions in your Pre or Post Nuptial Agreement.

If not, then there is a risk that your spouse or civil partner will be able to bring a claim against your Estate after your death.

Your Pre-Nuptial Agreement can include a provision that you both agree to make Wills to reflect the terms of the Pre-Nuptial Agreement, but there is no binding obligation for either party to do so. 

A divorce does not revoke or cancel a Will.

Your existing Will remains valid, but any references to your spouse or civil partner in your Will will be treated as if they have died before your divorce or civil partnership was dissolved.

This means that any gifts to spouse or civil partner, or appointments as executor or trustee, will be ineffective.

It is advisable to review your Will at the start of any separation process because if you die before your divorce or civil partnership is dissolved, then your Estate will still pass to your spouse or civil partner in accordance with your Will, which you may not want to happen.

You can create a temporary Will to cover the time until your divorce or civil partnership is dissolved and your finances are resolved, and then create an up to date will once the divorce or civil partnership is dissolved.

Unlike entering into a marriage or a civil partnership, entering into a Pre-Nuptial Agreement or a Post Nuptial Agreement will not revoke or cancel an existing Will.

To mitigate the risk of any claim against your Estate, your Will should reflect the provisions of your Pre or Post Nuptial Agreement or ensure that the provisions of your Will are at least as generous as the provisions in your Pre or Post Nuptial Agreement.

You may still wish to leave a large sum or all of your Estate to your spouse or civil partner on death for inheritance tax purposes to qualify for the spouse or civil exemption, but you may want to include trusts to create some asset protection around any family wealth.