Post-nuptial Agreements

We hear a lot about Prenups, but less about Postnups, so what is a postnup and should you consider entering into one?

Basically, a pre-nuptial agreement is an agreement, entered into before marriage, which sets out how financial matters will be dealt with should the couple divorce. There is a separate page on this website dedicated to prenuptial settlements which can be reached by clicking on the above link.

A Post nuptial agreement does the same as a prenup, in that it deals with how money and property will be divided should the marriage not work, but it is entered during the marriage. Agreements of this nature were recognised by the Courts as being binding (subject to certain conditions being met) long before the attitude to prenups caught up, and have effectively been regarded as binding since the decision of the Privy Council in the case of Macleod in December 2008.

The Courts have made it clear, however, that they will not allow such agreements to work as a “cheap pay off”, and the Court will intervene, and override the agreement if it does not deem the agreement to be fair, taking into account the background and asset history involved.

It is vitally important to ensure that when entering into a post nuptial agreement certain conditions prevail, so that when a Court comes to consider whether the agreement is binding, it is more likely to uphold it’s terms.

It will consider issues such as :-

1. Did both parties understand what they were agreeing to ?
2. Were both parties properly advised as to the terms of the agreement, and what it meant in practice?
3. Was either party put under pressure to enter into the agreement (Duress)?
4. Was there a full disclosure of both parties assets and financial circumstances before the agreement was entered into?
5. If there have been children born to the marriage, was the agreement entered into contemplating that such children were to be born?
6. Is there any evidence to suggest that holding the parties to the agreement would constitute an injustice to either party ?
7. Does entering into the agreement constitute conduct that it would be inequitable to disregard?

A useful checklist of factors which the Court should consider is set out in caselaw, but the considerations of the Court are constantly evolving.

In general, however, when a Court looks to the question of whether an agreement should be upheld, the starting point is that it should not seek to interfere with the agreement reached. It is in thoses cases where there has been an overburdening pressure by one party forcing the other to sign that the Court is most likely to intervene.

Provided that the agreement has been carefully and properly managed, that it’s terms are fair, and that the agreement was entered into freely, then the Courts will uphold the agreement.