Although they may be seen as unromantic, postnuptial agreements (or ‘postnups’) are a sensible way to ensure that your assets are protected in the event of your relationship breaking down. Every couple hopes that they will never have to make use of their postnuptial agreement, but by having one in place you can ensure a clean break and avoid going to the courts in the event of separation.
Postnuptial Agreements under Scots Law
What is a Postnuptial Agreement?
A postnuptial agreement is an agreement between spouses or civil partners that regulates the couple’s assets and affairs in the event of separation. Unlike prenuptial agreements, which are perhaps more widely known about, a postnuptial agreement is entered into after the formal union (marriage or partnership) of the couple.
Why make a Postnuptial Agreement?
Postnuptial agreements can be very useful. They allow couples to protect their assets and make sure that, in the event of a separation, they have made plans for how their property will be divided. It is often wise to come to such an agreement when the relationship remains amicable, to avoid lengthy court battles and bitter disputes in the event that the relationship breaks down.
In addition, a postnuptial agreement provides a flexible way for couples to arrange their affairs as they see fit. In the event of a separation, if no pre or postnuptial agreement has been made, the law provides a default position for how a family’s assets should be split.
Under section 9 of the Family Law (Scotland) Act 1985, the matrimonial property of a couple should be divided fairly. Section 10 of the 1985 Act makes it clear that the ‘fair’ division of assets will often mean an equal share for each couple, unless there are special circumstances that require otherwise. The law recognises that such ‘special circumstances’ may include the situation where a couple have come to their own agreement. Acknowledging that every family is different, therefore, Scots law allows couples to make the arrangements that are most suitable for them under a postnuptial agreement.
Are Postnuptial Agreements valid under Scots law?
Scots law allows couples to make so-called ‘marriage contracts’. This includes both prenuptial and postnuptial agreements. The confusion that has been caused in this area largely stems from the English position. While Scots law has always been willing to consider marriage contracts, for a long time the English courts said that contracts between spouses purporting to regulate their assets in the event of a separation were contrary to public policy. More recently, however, the English courts have also decided that they will recognise postnuptial agreements, so long as it is fair to do so (Radmacher v Granatino  UKSC 42).
When is it advisable to get a Postnuptial Agreement?
Many couples find that having a postnuptial agreement gives them peace of mind. However, while marital contracts can be useful for all couples, they are particularly important in some specific situations. It is particularly advisable to make a postnuptial agreement where:
- One party is likely to receive family wealth in the course of the marriage. If it is important that this wealth remains with the partner who received it, a postnuptial agreement may be valuable;
- The parties to the marriage or partnership have unequal wealth or one has acquired substantial amounts of property in the course of the marriage;
- One of the parties has been married before, particularly where he or she has children. Previous marriages involving children make the division of property particularly complicated. If the couple separates, one party may wish to guarantee that his or her earnings do not go to the other partner’s children from a previous marriage under a Will or upon death. Ring-fencing assets under a postnuptial agreement is an effective way to ensure this.
Is a Postnuptial Agreement binding? Can it be challenged in a court?
A postnuptial agreement is a contract - if it is validly executed, it will be binding on the parties. However, a postnuptial agreement will usually involve an attempt to ring-fence matrimonial assets. As such, under Scots law, it is possible to challenge a postnuptial agreement under section 16 of the Family Law (Scotland) Act 1985. Under that provision, a court has the discretion to vary or set aside such an agreement if it does not consider it to be fair and reasonable.
As such, it is possible to challenge a postnuptial agreement in court, although it should be noted that the Scottish courts have demonstrated a willingness to uphold prenuptial and postnuptial agreements. In the case of Gillon v Gillon 1995 SLT 678, for example, the court noted that judges should not be too ready to interfere with the agreement of the parties. Moreover, the court made it clear that the fact that the agreement led to highly unequal shares of property in the event of separation, that did not mean that the agreement was necessarily unfair.
Under English law, the focus of the courts is on whether or not the agreement would lead to a fair result, considering all the circumstances at the time of the divorce. Under Scots law, however, the courts are more concerned with whether the agreement was made under fair circumstances at the time. If the party made an informed decision at the time of the agreement, without undue influence or pressure, then the unequal agreement they entered into will nonetheless be binding.
Why is it important to get legal advice concerning your Postnuptial Agreement?
Postnuptial agreements can help couples manage their assets in the event of a separation. However, as outlined above, they are not beyond legal challenge. If you are considering entering a postnuptial agreement it is vital that you get legal advice. Doing so, and ensuring that the other party to the agreement has also had independent legal advice, can help insulate any agreement from future challenge. Furthermore, a solicitor will be able to help draft an agreement. This helps to ensure that all the relevant assets are covered and will guarantee that the document uses clear and precise legal terminology.
Contact our Postnuptial Solicitors Glasgow
No couple likes to consider the possibility of a separation. However, while we hope that you will never need to enforce it, making a postnuptial agreement today can ensure that you avoid lengthy and bitter disputes in the future. The solicitors at Miller Samuel Hill Brown have experience in this field and are ready to help you draft your postnuptial agreement. For more information, please contact us.