Such agreements are becoming increasingly popular.
If entered into before the marriage or civil partnership, they are called pre-nuptial (or pre-civil partnership) agreements.
If afterwards, they are called post-nuptial (or post-civil partnership) agreements (but can also be known as ante-nuptial or post-nuptial settlements).
For short they are often referred to as prenups / precips or postnups / postcips.
The law relating to such agreements is the same regardless of whether one is referring to a marriages or a civil partnership. For ease, we refer below to pre-nuptial and post-nuptial agreements, but what is said is equally applicable to civil partnerships.
These agreements are intended to enable a couple to agree and contract with each other about what should happen in the event of relationship breakdown. At present, however, neither pre-nuptial nor post-nuptial agreements are entirely binding. Even so, couples who have entered into a pre-nuptial agreement may be well advised to replicate it in a post-nuptial agreement to re-confirm their intention that the agreement should be binding between them.
No one wants to believe that their relationship will break down. The prospect of that seems particularly pessimistic to couples in the process of planning their wedding, or who have just returned from honeymoon. Pre-nuptial agreements are seen by many as unromantic. The reality is relationships do break down from time to time. Having an agreement in place can minimise the investment of time, expense and emotional energy needed to resolve many divorce / dissolution cases. Pre-nuptial agreements can provide parties with a degree of certainty about what will happen if they separate, providing a level of insurance against the discretionary approach of the Family Court.
In every case, the terms of the agreement must be very carefully considered.
A pre-nuptial agreement will usually deal with the financial provision that is to be made for the weaker financial party in the relationship. For example, it is common for a pre-nuptial agreement to deal with:
This is by no means an exhaustive schedule of provisions, and it is up to the couple to decide what matters are important to them to include in the agreement.
A post-nuptial agreement will usually repeat an earlier agreements terms in full. It may also include additional provisions.
The advantage of these agreements is flexibility – they can reflect agreements or arrangements between couples which would otherwise beyond the jurisdiction of the Court.
At present pre-nuptial agreements are not absolutely binding. They cannot be used to limit or oust the jurisdiction of the Court to deal with the financial consequences of divorce / dissolution. They have, however, taken on a great prominence in recent years, particularly following the Supreme Court decision in the well-publicised case of Radmacher -v- Granatino in 2010. The Supreme Court decided that Judges should acknowledge a couples autonomy and their ability to contract with each other with a degree of certainty.
A Family Court Judge will therefore give effect to a pre-nuptial agreement if it has been freely entered into with a full appreciation of its implications unless (in the circumstances in which the agreement falls to be examined) it would not be fair to hold the parties to its terms.
This statement of generally principle applies equally to pre-nuptial and post-nuptial agreements.
It is essential that both parties entering into an agreement should have independent and competent legal advice. This is so they understand the terms of the agreement and it consequences. It is critical that those considering entering a pre-nuptial agreement do so willingly, appreciating they are likely to be held to what could be a binding contract. It is also essential that there has been full financial disclosure between the parties, so that they each know the extent of the financial resources in existence at the time it is entered into.
Whether an agreement is fair is a subjective assessment which can only be undertaken against the backdrop of the circumstances of each case. The Supreme Court has said that an agreement cannot be allowed to prejudice the reasonable requirements of any children of the family. Any agreement which sought to do so would not therefore be binding, at least so far as those aspects were concerned.
An agreement which failed to meet a partys needs or to take into account in a way appropriate for the particular family one or more of the section 25 factors would likely not be binding. However, anyone entering into a pre-nuptial agreement should assume they will be held to its terms in the future.
Our courts have stated that the following matters can affect the weight which will be given to a pre-nuptial agreement:
A profound change in circumstances or the passage of time after the making of an agreement may render it unfair or reduce the weight capable of being attached to it. It is therefore a good idea to regularly review and update any pre-nuptial or post-nuptial agreement.
To have had the opportunity to take legal advice, but simply having failed to do so, will not automatically undermine the agreement. Likewise, the absence of financial disclosure alone might not be enough for a Court to decide a party should not be held to the terms of an agreement (it was not enough for Mr Granatino in the case cited above).
The guidance from our courts does not provide a determinative checklist against which the validity of an agreement can be measured. As with any legal agreement, it is essential to take expert legal advice before committing to a pre-nuptial or post-nuptial agreement, to ensure that it is effective and achieves its intended purpose.