Divorce and post-nups

26 Nov 2017

What is a post-nup?

Just like its older sibling, the pre-nuptial agreement, the post-nup spells out how a couple’s assets are distributed in the event of divorce or death. The difference is that a post-nup, as the name suggests, can be undertaken at any time after the marriage has occurred.

They are not legally binding but do carry weight in British courts. What weight they carry depends on circumstances in which they were entered into. They should:

  •          be signed by both parties without duress
  •          be established alongside independent legal advice
  •          include financial disclosure
  •      be fair

When should you put a post-nup in place?

A growing number of international high net worth individuals are moving to London with their families. It is now regarded as the ‘divorce capital of the world’ thanks to English law’s favourable attitude towards the non-wealth-creating spouse. This has led to a growing number of extremely high divorce awards, some in the hundreds of millions.

Wealthy individuals are wising up to the risk and are insisting on formal agreements with their spouses before moving here, specifically to protect their assets should their partner issue divorce proceedings. Specific circumstances where a post-nup should be established include when:

  • trustees want to make a substantial advance of capital to a married beneficiary
  • anew trust is being set up and a married person is becoming a beneficiary of that trust
  • intergenerational gifts are being given to avoid inheritance tax. 
  • a party could lose the benefit of a potentially exempt transfer as half may go to spouse
  • unwinding an offshore trust

Why should you consider a post-nup?

  •         They are not binding but do carry weight. It is particularly relevant with a wealthy couple – if it’s the majority or all the wealth they have, its less likely court will agree to exclude it from overall settlement.
  •          It is simpler than putting the assets into a trust and likely to be more effective in protecting the asset on divorce.
  •          Parties would need to keep money more separate  
  •          Post-nup would say why you were doing this and why it would be in the best interests of both parties.

So the key point to take away is always remember to flag up a post-nup when there’s going to be a substantial capital distribution, by way of gift or trust, to a married spouse, because in our experience, this an excellent piece of financial planning that is too often overlooked. 

Additional information