A postnuptial agreement is a formal written agreement between spouses or civil partners that regulates their assets and affairs in the event of separation. Unlike prenuptial agreements, a concept with which most people will be familiar, a postnuptial agreement is entered into after the parties’ marriage or civil partnership.
A postnuptial agreement can give you and your partner an element of control over how your assets will be divided in the event of divorce or separation. A postnuptial agreement can bring peace of mind, security and financial stability in the event of the relationship breaking down.
There are many situations where it is advisable to have a postnuptial agreement in place, some examples include:
- Where one of the parties to the marriage is already of substantial wealth and the other is not, or where one party acquires substantial wealth in the course of the marriage. This is particularly relevant to business owners who owned a successful business before they were married, or where their business becomes very successful during the course of the marriage.
- Where one of the parties may receive a large inheritance or other source of wealth that they wish to protect and to remain within their family. This is particularly relevant to business owners where they own or run a family business, or where they wish for their business to remain in the family.
- Where one of the parties has previously been married, and/or has children that are from a relationship prior to their current marriage. This can help guarantee, that should the couple separate, the business or business revenue of one party does not go to the other party’s children from a previous marriage.
Separation or Divorce with Business Owners
Upon separation and divorce of the parties, the default position in law is that matrimonial assets and liabilities should be divided fairly between the parties. In order to enable a fair division, there needs first of all to be a full disclosure of all matrimonial assets and liabilities.
In situations where one or both parties are business owners, it can sometimes prove difficult to track each party’s assets and income, which in itself can present challenges when trying to ascertain and divide matrimonial assets fairly.
If there is no prenuptial or postnuptial agreement in place, the fact that one of the parties owns a business can make it easier for that party to hide assets or misrepresent their income. Such misrepresentations are not in the spirit of the law and the merest suspicion of impropriety could give rise to a costly and lengthy court action which is best avoided for a number of reasons. Business owners or their partners may also be in the situation where one party supported the other whilst they built their business, and the question may arise as to whether they have the right to share in the success, value and assets of that business. Entering into a postnuptial agreement will help resolve some of these issues, along with the many others relating to businesses owners and divorce.
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