Alasdair Loudon

Alasdair talks about the changing culture of pre-nups in Scotland.

Hi there. My name is Alasdair Loudon and I am head of the Family Law team at Turcan Connell.

Most of the work which the Family Law team handles arises from separation and divorce, but once in a while we have a happier situation to deal with, that being when we are asked to advise in the preparation of a pre-nuptial agreement or indeed that of a pre-civil-partnership agreement or a pre-cohabitation agreement. The principles behind a pre-nuptial agreement or a pre-civil-partnership agreement are more or less the same, in that the purpose is to regulate in some way what would happen about financial matters if the relationship were to break down, and divorce or dissolution were contemplated. Pre-cohab agreements also look to arrange in advance what would happen if a relationship breaks down; although, of course, there is no divorce or dissolution to be undergone. It is easiest if I talk about prenuptial agreements, otherwise known as anti-nuptial contracts, but much the same can be said about all three types of agreement. I'll refer to them as "pre-nups" from now on.

We don't hear about pre-nups in Scotland very often for two good reasons. Firstly there is simply no culture of pre-nups, and they tend to be viewed with deep suspicion by whichever of the spouses didn't think of the idea in the first place. In many parts of the world, notably the United States and South Africa, pre-nups are an entirely run-of-the-mill occurrence before a marriage, but in this country they tend to be regarded as an indicator of a lack of commitment or a lack of belief in the duration of the marriage on the part of one of the spouses. Secondly, because the law in Scotland tends to exclude from the division of assets capital which is owned at the time of the marriage, it is not quite as important to have a pre-nup here as it would be, for example, in England.

Ironically, in England, as a matter of public policy, pre-nups are not currently enforceable. The courts down there are tending to pay more and more attention to them, but they are not binding on the court, merely an indication of a couple's intent at the time when the agreement was entered. However, in Scotland, the story is different. Although the position has not been properly tested by the courts, there is statutory authority for recognising a pre-nup providing it can be regarded as fair and reasonable at the time it was entered. In Scotland, when a couple enters a pre-nup, the purpose is usually to exclude from division, in the event of separation, those assets taken into the marriage by one of the parties.

Capital acquired by either of the couple or by the couple jointly after the marriage will fall to be divided between the husband and wife because it constitutes matrimonial property. The division is usually in equal shares. The only capital acquired during the marriage which does not fall to be divided in this way are assets acquired by way of gift from a third party such as parents or inheritance. It is unusual for one spouse to try and exclude from subsequent division capital which might have been built up during the marriage, but if both parties have legal advice before the agreement is entered there is no reason to believe that such an arrangement would not be upheld-although it is difficult to predict what capital will be acquired during a marriage. Although it has not been tested by the courts, I am virtually certain that any pre-nup which purported simply to exclude capital taken into the marriage would be recognised and upheld by the courts.

There is another important factor to be taken into account when considering whether a pre-nup will be regarded as enforceable, and that is whether the spouse who hasn't asked for a pre-nup has had a proper opportunity to take legal advice to consider his or her position, before entering the agreement. It is very much less likely that an agreement will be enforceable if it is presented to the perhaps more reluctant spouse very shortly before a marriage than if he or she has had an opportunity to consider carefully whether it is a good idea without the pressure of an impending wedding. A pre-nup in which both parties are represented is always likely to be more readily enforceable than one where one of the parties did not have legal advice.

So we can see that as time goes by and people in Scotland get more and more used to the idea of a pre-nup, they become more popular. Ironically, because of the definition of matrimonial property, and the fact that capital owned at the time of the marriage will generally be excluded from division, they are probably not as necessary as they are elsewhere. However, it is still a good idea for an individual entering a marriage with a lot of pre-established wealth to have a pre-nup.

There is one final possibility that I would like to mention. Because it can often be very difficult, years after a marriage and in the event of separation, to establish what one owned at the time of the marriage and what one would therefore be looking to exclude from division, it can be a very good idea to record formally what one owned at the time of the marriage. This could be done in the form of an affidavit, and the great thing is that your spouse doesn't even need to know that you've done it. However, in the unfortunate event of separation many years down the line, it can prove to be an invaluable tool.

I would certainly urge anybody who has pre-established wealth and who is intending to marry, to take legal advice well in advance of the wedding, on whether or not it would be a good idea to have a pre-nup. If you would like to know more about this, please do not hesitate to call me on 0131 228 8111. Thank you very much indeed.

Find out more about pre-nups.