With each passing year, more people in Scotland are giving consideration to and entering into pre-nuptial and post-nuptial agreements. As the name suggests, a pre-nuptial agreement is an agreement or contract entered into between two parties prior to marriage or civil partnership. However, it is also possible to enter into a post-nuptial agreement, which is a contract entered into between parties following marriage or civil partnership.
Although many more people today are aware of pre-nuptial agreements, many do not realise that it is still possible to enter into a very similar arrangement with one’s spouse or civil partner after marriage or civil partnership. Although pre- and post-nuptial agreements are much more common than they used to be, it is still the case that many more people than currently have one should be giving consideration to entering into a pre- or post-nuptial agreement. For example, business owners should give strong consideration to entering into such an agreement, particularly where their spouse is a shareholder or partner or is likely to become a shareholder or partner for tax or other purposes.
There has been recent case law involving such situations, where business owners have involved their spouses in going concerns in the form of either partner or shareholder, and this has had significant repercussions upon separation. Many of the problems caused by such a scenario could be resolved by entering into a pre-nuptial or post-nuptial agreement at the point of assumption of the spouse or civil partner as a partner or shareholder of the business.
Of course, it is often the case that business owners are advised to take such a step in order to minimise tax, but they should also seek family law advice at the same time.Pre-nuptial agreements have been recognised in Scotland for some considerable time. Parties who have previously been married or been in a civil partnership and are marrying again or entering into a civil partnership again, regularly have pre-nuptial agreements prepared without difficulty. However, many first time spouses or civil partners still find the issue a difficult one to raise with their spouse or civil partner to be.
Post-nuptial agreements are as enforceable as pre-nuptial agreements, provided they are drafted in the correct manner.The fact of the matter is that the cost involved in obtaining a pre-nuptial or post-nuptial agreement is relatively limited, certainly compared to its importance and effect. Such an agreement also allows parties to record almost anything they want, both in relation to past wealth and future outcomes.
They also allow parties to make provision for such things as inheritances and gifts received from family and friends. Although inheritance and gifts are generally excluded from the definition of matrimonial property upon separation, there are numerous situations where parties use such funds for joint purposes.
This regularly results in a dispute upon separation, and there can be significant argument as to whether the party who held the original inheritance or gift and has used that for joint purposes should be recompensed upon separation and, if so, to what extent. Agreement about such matters in advance, provided they are fair and reasonable, can help to avoid such disputes upon separation and divorce.
The agreement will be enforceable, provided it is fair and reasonable at the time it is entered into. It can protect assets, such as houses, land and business interests. Pre-nuptial and post-nuptial agreements are not the preserve of the rich. It is regularly in the interests of parties with modest wealth to enter into a pre-nuptial or post-nuptial agreement. This can help to ensure, for example, that a parent’s estate on death is passed to his or her children, rather than to his or her spouse and ultimately their children. The costs involved in a basic pre-nuptial or post-nuptial agreement are considerably less than the cost of a contested divorce and, if drafted properly, help to minimise dispute upon separation.For the avoidance of doubt, although pre-nuptial and post-nuptial agreements can be binding, it is perfectly possible to vary their terms if both parties wish to do so.
For example, it is often the case that parties will enter into a pre-nuptial agreement prior to marriage or the commencement of a civil partnership, and subsequently decide, perhaps a number of years later, that the original agreement should no longer apply in its original form. There is no difficulty in entering into a supplementary agreement and altering the terms of the original agreement at that stage if both parties are content to do so. Such an alteration could be, for example, as a result of the birth of children, the success or failure of a business venture, or generally a significant change in the parties’ financial positions. It is anticipated that there will be an increase in the number of marriages during the next twelve months as same sex marriages will be able to take place in Scotland from 31 December 2014.
A number of same sex weddings have already been booked for 31 December 2014 and early 2015. All couples should give consideration to entering into a pre-or post-nuptial agreement simply to protect themselves in the same way that they would prepare a Will or take out an insurance policy. For more information about pre-nuptial or post-nuptial agreements and any other aspect of family law in Scotland, please contact Charles Brown, Head of our Family Law Department, on This email address is being protected from spambots. You need JavaScript enabled to view it. on 0141 227 6046.
