Pre-nuptial agreements are now increasingly recognised as an important part of wealth protection and succession planning, particularly for individuals with business interests, inherited wealth, trusts, family assets or significant pre-marital resources. But what if you are already married and no pre-nup was put in place? All is not lost. Zoe Worthington, an Associate in JMW’s Family team, looks at how a post-nuptial agreement can help couples regulate their financial arrangements after marriage, provide greater certainty, and protect wealth in the event of a future divorce.

What is a post nuptial agreement?

Like a pre-nuptial agreement, a post-nuptial agreement enables a couple to set out how property, savings, business interests, inherited wealth and other assets should be treated if the marriage were to break down. For high-net-worth individuals and families, this can be a valuable way of creating clarity, reducing future uncertainty and protecting wealth that may have been built up before or during the marriage.

• Individuals with an interest in a business, particularly a family business
• Individuals with a beneficial interest in one or more family trusts
• Individuals who have received an inheritance, or who may have future inheritance prospects they wish to protect
• Individuals who built up significant wealth before marriage, particularly where there are currently no, or limited, jointly held assets

A post-nuptial agreement can be entered into at any point after marriage. It may be particularly important where there has been a significant change in circumstances, or where an existing pre-nuptial agreement no longer reflects the couple’s financial position, family arrangements or future intentions. Examples of significant changes may include:

• The birth of a child
• A loss of income, for example through ill health or disability
• Either party acquiring a significant asset or receiving an inheritance that was not accounted for in the original agreement

It is also sensible to review an agreement periodically. In practice, review provisions are often included every five or ten years, or sooner if there is a material change in circumstances. This helps ensure the agreement remains current, fair and better placed to carry weight if it is ever considered by the court.

Are post nuptial agreements legally binding?

On divorce, the court will consider what weight should be given to any nuptial agreement. Although pre-nuptial and post-nuptial agreements are not automatically legally binding in England and Wales, the courts are increasingly prepared to uphold them where they have been entered into properly and where the outcome is fair. For a post-nuptial agreement to carry as much weight as possible, the following safeguards should usually be in place:

• The agreement should be fair overall to both parties and should meet the needs of any children.
• Both parties should be transparent with each other and exchange appropriate financial disclosure before entering into the agreement.
• Both parties should have the opportunity to take independent legal advice and understand the implications of the agreement.
• Both parties should have sufficient time to consider the terms and should not feel under pressure to sign.

Why should I consider a post nuptial agreement?

If a pre-nuptial agreement was not discussed before the wedding, or if circumstances have changed since an existing agreement was signed, a post-nuptial agreement can provide an important opportunity to put financial arrangements on a clearer footing.

For many couples, the value of a post-nuptial agreement lies not only in the protection it may offer on divorce, but also in the certainty and transparency it can bring during the marriage. By agreeing how particular assets should be treated, couples can reduce the scope for future dispute and approach financial planning with greater confidence.

If you are concerned that you do not have a pre-nuptial agreement or would like to explore whether a post-nuptial agreement could help protect your financial position, JMW’s specialist Family team can help. We regularly advise individuals and families on nuptial agreements and wealth protection on divorce, including where there are business interests, inherited assets, trusts or complex family wealth structures. Our approach is expert, discreet and sensitive, with a focus on achieving arrangements that provide clarity and protection while working for the couple and their wider family circumstances.