You might be excused for thinking a pre-nuptial agreement is only for the rich and famous. It is clear that those who have built up considerable wealth or have significant assets might seek to protect much of it, especially when divorce statistics are so high. Anyone who has married or entered into a civil partnership, does so in the expectation that the relationship will last for life. Sadly, that is not always the case, as 42% of marriages end in divorce with 34% of married couples divorcing before their 20thwedding anniversary!
What is a pre-nuptial agreement?
A pre-nuptial agreement, or “pre-nup” as they are commonly known, is a legal document that two parties enter into in anticipation of marriage. The aim is to agree how certain assets will be divided in the event of the parties separating. Pre-nups can also “ringfence” any assets which are expressly excluded from becoming matrimonial property.
A pre-nuptial agreement can be simple and straightforward to extremely complex depending on each person’s circumstances. Providing the terms of the pre-nup are fair and reasonable when the pre-nup was entered into, they are likely to be upheld should the divorce come to court.
Pre-nuptial agreements and civil partnerships
Soon to be civil partners can also enter into a pre-nuptial agreement and this is dealt with in the very same way as with couples contemplating marriage.
Pre-civil partnership agreements, also known as “pre-cips,” have become increasingly popular since the introduction of civil partnerships in 2005, providing a way to protect assets and foster security and transparency at the start of a partnership.
Why might you consider needing a pre-nuptial agreement?
Couples might choose to enter into a pre-nup where they have built up wealth and assets before their marriage, aiming to protect assets in the event of their divorce. It is also possible to specify business assets built up before the marriage are protected.
Your pre-nup might be your insurance policy
Just like critical illness insurance, you take it out hoping never to have to use it. A pre-nuptial agreement is a bit like that. Each party enters into it to protect their assets in the hope that they will never need to rely on it.
However, it is important to note that the enforceability of a pre-nuptial agreement can depend on the circumstances prevailing at the time of enforcement, as courts must consider whether it would be fair to uphold the agreement in light of these factors.
What a pre-nuptial agreement will do is set out who should receive what in relation to the property, assets and investments covered by it.
Creating a Prenuptial Agreement
Creating a prenuptial agreement is a crucial step in protecting your assets and financial future. It’s essential to approach this process with care and attention to detail. Here are some key considerations to keep in mind:
First, open and honest communication between both parties is vital. Discuss your financial circumstances, including assets, debts, and future financial goals. This transparency will form the foundation of a fair and comprehensive pre-nuptial agreement.
Next, document all assets and liabilities. This includes property, investments, savings, retirement benefits, business interests, and any debts. A thorough financial disclosure ensures that both parties are fully aware of each other’s financial situation, which is crucial for the agreement’s validity.
Finally, consider the future. Think about how you want to handle financial matters during the marriage and in the event of a separation. This includes decisions about spousal aliment, the division of matrimonial assets, and the management of any joint investments or properties.
The Importance of Independent Legal Advice
When creating a pre-nuptial agreement, it’s vital to seek independent legal advice from a qualified family law solicitor. This ensures that both parties understand the terms and implications of the agreement and that their rights are protected. Independent legal advice also helps to prevent any potential disputes or challenges to the agreement in the future.
A family law solicitor can provide guidance on what is fair and reasonable, ensuring that the agreement is balanced and equitable. They can also help you navigate any complex legal issues that may arise, providing peace of mind that your prenuptial agreement is robust and enforceable.
What to Include in a Prenuptial Agreement
A pre-nuptial agreement should include a comprehensive list of assets, debts, and financial obligations. This may include:
- Residential and commercial property
- Investments and savings
- Retirement benefits and pensions
- Business interests and assets
- Debts and financial obligations
- Inheritances and gifts
It’s also essential to include provisions for the division of assets and debts in the event of a divorce or separation. This may include:
- A clear definition of matrimonial assets and separate property
- A plan for the division of assets and debts
- Provisions for spousal aliment and support
- A plan for the management and distribution of assets during the marriage
By including these elements, you can ensure that your pre-nuptial agreement is comprehensive and addresses all potential financial issues that may arise.
Are Prenuptial Agreements Legally Binding in the Scotland?
In Scotland, as a concept, pre-nuptial agreements are regarded as being enforceable and legally binding. There is, however, no extensive case law on the subject of pre-nuptial agreements. A House of Commons research briefing published on 16th October 2023 pointed out:
“Specifically, sections 9 and 10 of the Family Law (Scotland) Act 1985 make provision for ‘matrimonial property’ in Scotland to be shared fairly on divorce. Fair sharing is usually equal sharing unless ‘special circumstances’ justify different proportions. Special circumstances include an agreement between the parties as to the division of matrimonial property on divorce.
There are some restrictions on a couple’s freedom to contract. It is now well‑established that by virtue of section 16 of the 1985 Act, the court has power to set aside a pre-nuptial agreement when it was not “fair and reasonable” at the time it was entered into, and subsequent case law has developed this test with reference to a number of individual principles. The fact that the terms of an agreement led to an inequitable outcome is not itself enough to justify varying it or setting it aside.”
To ensure that a prenuptial agreement is upheld, it is essential to:
- Seek independent legal advice
- Ensure full financial disclosure
- Make sure the agreement is fair and reasonable
- Sign the agreement at least 28 days before the marriage
By following these steps, you can enhance the likelihood that your pre-nuptial agreement will be recognized and enforced by the court, providing you with greater financial security.
Can you enter into a pre-nuptial agreement if you are already married?
The short answer to this is “no.” However, there is nothing to prevent you and your spouse or civil partner from entering into a post-nuptial agreement. This works in the very same was as a pre-nuptial agreement but you enter into this after you are married or in a civil partnership. Again, provided it can be shown that the terms of the post-nup were fair and reasonable at the time it was drawn up, it is likely to be enforceable.
International Considerations
If you’re planning to get married abroad or have assets in multiple countries, it is essential to consider the international implications of your pre-nuptial agreement. Different countries have different laws and regulations regarding pre-nuptial agreements, and it’s crucial to ensure that your agreement is enforceable in all relevant jurisdictions.
It’s recommended you seek advice from a qualified family law solicitor with experience in international family law. They can help you navigate the complexities of international pre-nuptial agreements and ensure that your rights are protected.
Experienced Family Law Solicitors, Wishaw, Lanarkshire
Our experienced family law team, led by Sarah Lynch, have helped clients with their separation, divorce, contact and residence issues over the years. We can explain and help you with your pre-nuptial agreement. Just get in touch with us if you need any help with any family law problem.
