Prenups divide public opinon, but they’re just like any other insurance policy - Jennifer Macdonald

With summer just around the corner, the 2023 wedding season is already in full swing. Most couples preparing to tie the knot will be familiar with the frenzy of wedding preparations. For some couples, however, the lead-up to their wedding day also involves consideration of somewhat more serious matters. An increasing number of those choosing to marry or enter civil partnerships in the UK are putting in place prenuptial agreements. Put simply, a prenuptial agreement is a contract between two parties in advance of marriage or civil partnership which regulates matters of a financial nature in the event of separation (and sometimes also stipulates arrangements during the relationship itself).

Frequently, our family law team is instructed by those who have accumulated wealth prior to the marriage or civil partnership, or those likely to inherit money or assets in the future, who wish to retain control over such wealth if the relationship ends.

The content and enforceability of prenuptial agreements vary widely between different countries.

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Consider Scotland, where a detailed statutory framework exists providing clarity as to what does (and does not) fall to be divided between spouses or civil partners in the event of divorce or dissolution. Matrimonial property (or partnership property) is defined as all property belonging to the parties or either of them at the date of separation and which was acquired before the marriage (or civil partnership) for use as a family home or during the marriage or civil partnership but before the date of separation. Assets received by way of gift or inheritance from third parties are excluded... The Scottish legal system offers a level of protection to wealth which has been accumulated before marriage or which is inherited by one party. However, such protections are not absolute, and any changes to the form or structure of assets may bring them within the realms of matrimonial or partnership property.

Jennifer Macdonald is a Senior Associate, Turcan ConnellJennifer Macdonald is a Senior Associate, Turcan Connell
Jennifer Macdonald is a Senior Associate, Turcan Connell

In England and Wales, there is no specific framework regulating the division of assets on divorce or dissolution, and the courts have extremely broad powers to make any financial orders they consider to be fair. Whilst the courts in England and Wales can, and often do, recognise the non-matrimonial source of an asset, such protection is by no means guaranteed.

The primary purpose of a prenuptial agreement in both Scotland and England tends to be the protection of assets which do not derive from the efforts of parties during their marriage. In some situations, couples also choose to set out specific arrangements which will apply in the event of separation, such as the provision of housing.

The enforceability of prenuptial agreements in Scotland has yet to be fully tested by the courts, but it is generally accepted that they will be upheld provided that certain safeguards are met. In England, the courts will retain ultimate control to make orders regardless of the terms of a prenuptial agreement. However, a landmark Supreme Court ruling in 2010 dramatically enhanced the status of prenuptial agreements in England, and a recent case in the High Court has further reinforced their status under English law.

For those contemplating a prenuptial agreement, it is vital to plan ahead so that the agreement is signed well in advance of the wedding or civil partnership. It is also important to consider what legal systems might be involved, and if a couple has international or cross-border links, they will wish to ensure that the agreement will be upheld in each country. It helps to appoint a solicitor who is experienced and pragmatic.

Prenuptial agreements will no doubt continue to divide public opinion. However, marriage and civil partnership themselves are contracts so perhaps there is some sense in having a contract to regulate their potential ending as well as their beginning. We insure our homes and possessions not in the hope that they will go up in flames but because we know of the risk that a fire might break out. We take out insurance policies to protect ourselves against such risks, whilst simultaneously hoping that they never come to pass. Prenuptial agreements are, for all intents and purposes, just another form of insurance policy. To have (and to hold) an agreement can alleviate difficult and protracted financial disputes in the future.

Jennifer Macdonald is a Senior Associate, Turcan Connell



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