Pre or Post Nuptial Agreements are increasingly used as wealth management tools. There are important factors to consider before having such a contract prepared.
The purpose of the Agreement is to ring fence or exclude certain assets from the matrimonial “pot” in the event of separation. Matrimonial property is any asset in joint names or in the individual’s sole name acquired after the date of marriage to the date of separation. If a house is purchased before marriage but bought in contemplation of marriage to be used as the family home, then it is treated as matrimonial property.
Who might it apply to? Not just the rich or famous. It may be a second marriage with children from the first marriage whose inheritance needs protecting. Or a thirty-something professional couple, bringing their own assets to the marriage, built up over many years before meeting each other. Family money may have been gifted or inherited that ought to be protected. This is not the preserve of the landed gentry. The most modest of family contributions deserves protection.
As long as it was fair and reasonable at the time it was entered into, in Scots Law, such Agreements are generally treated as legally binding contracts. Consider what the document is to include. Ring fencing assets acquired prior to marriage to ensure that they are not treated as matrimonial property is likely to be seen as a fair and reasonable proposition. An Agreement that provides one party with all assets built up during the marriage and they are not to be shared in the event of separation would be unfair and unreasonable. Such an Agreement would be capable of being challenged in court and set aside if the challenge was successful.
As a potentially binding legal contract, it carries significant implications in the event of separation. It is important that each party seeks their own legal advice from a family law solicitor experienced in drafting and negotiating the terms of such Agreements. An experienced family solicitor sense checks what your proposals are trying to achieve. They apply their legal knowledge to your particular circumstances to see the bigger legal picture and best advise you of whether or not the Agreement is robust, fair and reasonable.
As an Agreement both parties are expected to have consented freely to its terms. Having separate legal representation demonstrates your contract has been negotiated freely and with your informed consent. Make time for negotiation. It is not an Agreement to be drafted a week before a wedding date. Any indication of force or intimidation, the advice will be against entering in to such a contract.
Treat it as a living document that may need review. What suits in the early years of marriage may not when children come along. The Agreement remains binding until formally varied by a later written contract.
Romantic? No. Pragmatic? Yes. With the increasing number of enquiries about nuptial agreements, couples are recognising the benefits of risk management against what might seem awkward conversations.