More couples are signing ‘post-nups’
More couples – especially where one inherits – draw up ‘post-nups’ to keep new wealth for themselves, says Laura Suter
Gone are the days when married people agreed to split their assets 50:50. More and more are drawing up “postnup” agreements, sometimes long after their marriage – triggered by a financial event such as receiving a windfall.
Much like a pre-nuptial agreement – which takes place before the wedding – post-nups lay out how assets will be split on divorce.
They are rumoured to have been used by celebrity couples, such as Beyoncé and Jay Z, to split their assets after both amassed significant earnings. A post-nup was also referred to in the divorce case of disgraced American politician Eliot Spitzer and his former wife Silda in 2014.
No figures are collated about the number of post-nups drawn up each year, as they are private arrangements, but lawyers say they are seeing more and more people ask for them.
“In the past three to four years there has been quite a dramatic rise in the number of post-nup agreements,” said Rosie Schumm, a partner at law firm Forsters. “It is true they are unromantic, but any wealthy family should consider them as they are the best way to protect assets in a divorce.”
Prompts for post-nups
Couples’ reasons for getting a postnup vary, say lawyers.
“The high-profile press coverage of divorces makes people more conscious that they want to protect their wealth,” said Jeetesh Patel, a partner in family law at Hodge Jones & Allen.
The most popular reason is where one half of the couple unexpectedly comes into money and wants to protect it. This can be money gained from an investment or from an inheritance that they want to ringfence. Second marriages and more complicated family structures also make the need for post-nups greater.
Mr Patel said: “Say the husband has come in for a big inheritance, but has children from a previous marriage. He will want a post-nup to protect his inheritance and ensure his two children outside the marriage are protected as well.”
With more younger couples relying on the “Bank of Mum and Dad” to help them get on the property ladder, some parents are insisting on postnups to protect their gift in the case of a divorce.
Mr Patel said he had one instance where a father, who was a property developer, was putting properties in his married daughters’ names for tax reasons. He insisted they got a postnup to protect his wealth “walking out of the door with his sons-in-law” if they divorced.
Those in second marriages, who have built up considerable wealth, investments or have their own business may also want a post-nup to protect their money, said Mr Patel. While a prenup involves tricky conversations before the marriage has taken place, those getting a postnup have more time, and often less emotion, involved.
In other cases – albeit rarer – couples are getting post-nups after one spouse has cheated. This is usually to clear up financial affairs and offer some form of security, possibly as a precursor to an eventual divorce. “When one party has had an affair, the wife often says to the husband, ‘if we’re going to restore trust, I want to know I am going to be all right financially’,” said Ms Schumm. “Lots of lawyers will say that it should be a prerequisite before the wife goes back into the marriage.”
There have also been cases where a couple agree a post-nup including financial penalties if the cheating partner strays again.
Post-nups are not always for cynical reasons. Some couples get them to set in stone the outcome that all assets, and custody of any children, will be split down the middle in the event of divorce. “I’ve had one of those, a very wonderful situation that was all about shared parenting, shared assets and an egalitarian approach to their assets. It is encouraging as a concept,” said Ms Schumm.
Mr Patel said that courts could well rule against this if they determine that one side of the couple needs more money than the other.
But how do you get a post-nup?
Like a prenup, post-nup agreements are not legally binding. There are ongoing legal discussions about whether the law should be changed, but as things currently stand, the court has the final decision.
However, such has been the rise in the use of the agreements that they are now seriously considered by divorce courts.
There are certain rules that couples have to abide by to ensure the court considers the document. Each half of the couple must use specialist legal advisers, at separate law firms, which Ms Schumm admits can mean that costs mount up.
“There are ways of keeping the costs at a reasonable level. It depends on the complexity of the case. Often, if there are complex trust structures or cross-jurisdictional elements, it will be more expensive,” she added.
Couples also need to ensure that all relevant finances and assets are declared, that the post-nup is not unfairly weighted in one person’s favour, and that any children or dependants will be supported.
No one party must be put under duress or pressure to sign the agreement either, as this will invalidate it, added Ms Schumm.
She admitted that there would almost always be one person who wanted the agreement more than the other – which could lead to some tricky conversations.
“It can expose contentions,” she said. “In the end it’s something that can save a marriage but it can also break a marriage.”
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