Pre-nuptial & Post-nuptial Agreements and Farming Partnership Agreements

Many people still think pre-nuptial agreements are only for celebrities or the very wealthy. In reality, they are now used by many different couples, especially where family assets or a business need protection.

This is particularly important for farming families. If a marriage breaks down, there can be a real risk that land, buildings, business interests, or other long-term family assets may have to be sold, borrowed against or divided. A pre-nuptial or post-nuptial agreement can help protect assets that have been in the family for generations and can reduce the risk of disputes affecting the farm, the wider family, the business and future succession plans.

A pre-nuptial agreement, often called a “pre-nup”, is made before marriage. A post-nuptial agreement, often called a “post-nup”, is made after marriage. Both can help reduce the risk of costly court proceedings by setting out, in advance, how certain assets should be treated if the marriage ends. For farming families, this can help make clear which farming assets should remain outside the matrimonial pot or be dealt with differently, so that ownership and succession plans are better protected.

If a couple divorces, the family court has wide discretion in dividing assets. That means the outcome can be uncertain if the matter goes to court. This can be difficult when the family intended certain assets, such as farmland or partnership assets, to be protected from future divorce claims.

One way to create more certainty is to consider a pre-nup before marriage, or a post-nup if the couple are already married. The agreement is made between the couple and records what they intend should happen financially if the marriage later breaks down.
The agreement sets out what should happen to assets on divorce and how any financial settlement should be approached. It also gives both people the chance to think about their future needs while the relationship is still positive, and discussions can usually take place more calmly.

Benefits of a pre-nup or a post-nup

A pre-nup or post-nup can help preserve family wealth, protect specific assets, reduce disputes, and avoid expensive, uncertain court proceedings. It can be useful in several situations, including:

• where you want certainty about who will inherit or control the farm, and want to avoid disputes that could disrupt succession plans
• where the partners in the farming business want clarity about ownership and want to reduce the risk of the business being broken up
• where you own assets, such as a business, that would be difficult to divide equally, particularly if other people also have an interest in that business
• where either person has children from a previous relationship, or other dependants, whose inheritance they want to protect
• where you have been married before and want to protect a financial settlement from that earlier relationship
• where you have an inheritance, compensation payment or other assets that you want to keep separate.

Opening up the conversation and protection for the non-farming spouse

These agreements are not only about protecting the farming spouse or farming family. They can also help the non-farming spouse by:

• setting out what financial security or entitlement they would have
• making the financial position clearer for both people
• reducing the risk of future surprises
• encouraging open conversations about expectations.

An agreement is usually more likely to stand up to scrutiny if it is fair and balanced for both people.

A farming partnership agreement can also require partners to consider a pre-nup before marriage. This can make it easier to raise what may otherwise be a sensitive topic. However, such a clause may not be enforceable in practice, because the partner is only one person in the relationship, and their future spouse cannot be forced to sign. If a future fiancé refused to sign, or signed but later failed to follow the agreement, it is unlikely that the other partners would want this treated as a serious breach warranting the farming partner’s expulsion from the partnership.

Are pre-nup or post-nups legally binding?

Pre-nups and post-nups are not automatically legally binding in England and Wales. This means a judge dealing with a divorce is not required simply to follow the agreement. However, if the agreement was properly entered into, the court must take it into account. In practice, the courts can give significant weight to these agreements because they reflect the couple’s intentions. Certain steps should be followed to give the agreement the best possible chance of being upheld.

For a pre-nup or post-nup to be upheld by a court, the following points will usually be important:

• Both people should give full and honest information about their finances, so each understands the other’s financial position.
• A pre-nup should be signed a reasonable time before the wedding, ideally at least 28 days before the marriage.
• Neither person should be pressured to sign. There should be no duress or coercion.
• Both people should receive independent legal advice before signing to ensure they understand what the agreement means.
• The agreement should make fair provision for the reasonable financial needs of the less well-off person.

Why would I need a post-nup?

A post-nup may be useful if, for example, you receive a large inheritance or other significant asset after marriage and want to protect it, perhaps for the benefit of children. Farming families should also consider a post-nup before gifting or transferring farmland to the next generation, to ensure a clearer record of how that land should be treated in the event of a future divorce.

Can I protect future inheritance?

Yes. A pre-nup or post-nup can address future assets, such as an expected inheritance, future growth in a business’s value, or gifts from family. These can be described as separate property. It is important to give as much detail as possible about likely future assets and the possibility of increases in value. This is one reason why full financial disclosure is so important.

It can also be helpful to include review clauses. These allow the couple to revisit the agreement if family or financial circumstances change.

Do I still need a pre-nup or post-nup if there is a partnership agreement?

A farming partnership agreement can help, but it is not a complete substitute for a pre-nup or post-nup. Land is not owned by the partnership itself; it is owned by the partners who make up the partnership. However, recording land as partnership property can add another layer of protection because it may be harder to remove the land from the partnership without the agreement of all partners. This protection is not watertight. Ideally, the pre-nup or post-nup and the farming partnership agreement should work together to give stronger protection for farming assets.

Asset protection should be looked at as a whole. For example, on a death discretionary Will trusts may help trustees delay or avoid transferring the farm to a beneficiary if that beneficiary’s marriage appears unstable or they are going through a divorce. Professional advice should be taken on all relevant options.

Contact our solicitors today

If you need legal assistance regarding any of the above topics, please complete our online enquiry form, and we will be happy to assist you with your enquiry.