How to write a prenuptial agreement?
Planning a wedding? Entering into a prenuptial agreement may be the last thing on your mind, but it’s worth knowing what a prenup is and how it might be beneficial.
A pre-nuptial agreement is a contractual agreement that is an effective way of protecting assets owned prior to marriage and a sensible way to protect a couple’s financial interests. A prenuptial agreement is a written agreement that will narrate what is to happen in the unfortunate event of separation, ring-fencing certain assets so as to exclude them from the matrimonial property.
It is very important that both parties seek separate and independent legal advice in relation to the prenuptial agreement. This reinforces that both parties are freely entering into the agreement without any undue pressure and could prevent protracted court proceedings if the agreement is challenged.
It is also important that specialist family law advice is sought well in advance of the wedding to ensure that both parties have sufficient time to consider the terms of the prenuptial agreement to ensure it is considered fair. In the event that advice is sought at a time where the wedding is imminent, it is better to consider entering into terms of a Post-Nuptial Agreement which is drafted and signed after the wedding.
A prenuptial agreement can ensure that assets acquired prior to marriage by one partner to the marriage or alternatively, where both parties are bringing assets and wealth to a marriage, are protected in the event of a relationship breakdown.
What is a prenuptial agreement?
Entering into a prenuptial agreement, also referred to as a prenup or, premarital agreement is a legally binding contract entered into between two individuals intending to marry . A prenuptial agreement will narrate the ownership of certain assets in the event that the marriage breaks down in the future.
A prenuptial agreement will define property known as ‘separate property’ held by each party prior to the marriage and narrate how the separate property is to be treated on separation.
Why consider a prenuptial agreement?
A prenuptial agreement is a sensible way to reduce conflict in the event of separation and legal expenses in resolving the financial matters of divorce. It can be used where a party brings significant wealth to a marriage but can also be used by any party wishing to protect an asset acquired prior to marriage, inheritance or gifts from third parties.
A prenuptial agreement can also be a valuable tool in protecting future inheritance one partner may receive, or to protect inheritance a child from a previous relationship may inherit.
A prenuptial agreement can assist parties prior to entering into a marriage to communicate about their financial circumstances and encourages transparency. It can be tailored to suit individual circumstances subject to the parties ensuring that they seek specialist legal advice on its terms.
Can I get a prenuptial agreement if I’m in a civil partnership?
Obtaining a prenuptial agreement is not exclusive to marriages and functions in the same way for civil partnerships.
Individuals in a civil partnership also have the option to secure a prenuptial agreement, allowing them to establish clear terms and provisions related to asset division and financial matters in the event of a dissolution of the partnership. This legal document provides a structured and agreed-upon framework, offering both parties a sense of security and clarity regarding any financial issues.
Why and when would you need a prenuptial agreement?
Entering into a marriage is a significant commitment. This commitment results in assets which a party may consider to be solely their asset such as property, income, and pension contributions becoming ‘matrimonial property’ in terms of the law.
By entering into a prenuptial agreement, parties can consider assets they are bringing to the marriage and whether they wish these to be disregarded from the definition of matrimonial property in the unfortunate event of divorce. It provides more certainty for parties in the event of separation and protects the legal rights of both parties.
When can you enter into a prenuptial agreement?
It is important to bear in mind that a prenuptial agreement can only be entered into before marriage and where both parties have had sufficient time to consider its terms. It is open to parties to enter into a post-nuptial agreement and is a sensible way to ring fence assets after marriage, although there is an element of good faith required by the parties as they have already married by the time of its signature.
A post nuptial agreement can also be considered by parties at a much later stage in a marriage in the event of a material change in the financial circumstances of a party to the marriage.
What is the difference between a prenuptial agreement and a postnuptial agreement?
A prenuptial agreement is a legal document mutually entered into by parties prior to marriage, establishing the financial terms of their relationship that intends to protect pre-marital assets. Similarly, a postnuptial agreement serves the same purpose but is crafted during the course of the marriage rather than beforehand and can look at the division of joint assets.
Both documents provide a framework for handling financial matters, offering each partner a clear and predetermined understanding, particularly in the event of a divorce, regarding asset division and other financial aspects.
Can I change a prenuptial agreement after marriage?
Altering prenuptial agreements after marriage is not possible. However, a postnuptial agreement is a viable option for any significant changes.
If circumstances change and the terms of your prenup become outdated, a postnuptial agreement can serve as a suitable replacement. Reasons for opting for a postnup may include the birth of children not addressed in the initial prenup or significant shifts in one spouse’s financial situation.
To ensure the continued relevance and enforceability of your agreement, it is prudent to periodically review your prenup during the marriage. Our experts in post-nuptial agreements are available to provide guidance on crafting a postnup to supersede a prenuptial agreement after marriage.
What is the cost of a prenuptial agreement?
The expense associated with a prenuptial agreement varies widely, contingent upon its complexity. For example, if the asset framework is intricate or if international factors come into play, this can have implications on costs.
Content of a prenuptial agreement
Creating a prenuptial agreement requires careful consideration, specialist legal advice, disclosure of all assets and liabilities, and clear communication between both parties. A typical prenuptial agreement would cover the following information:
- Identification of the parties: The full names of both parties, their address and date of the wedding
- Definitions of important terms in the agreement: Definitions of terms such as ‘separate property’ will be narrated. A list of the ‘separate property’ should also be included in the prenuptial agreement.
- Consideration of the treatment of income during the marriage or where separate property is partly used to acquire property which would be matrimonial property. The binding nature of the agreement: the agreement will narrate that both parties have had the benefit of separate and independent legal advice and fully understand the significance of the agreement and its terms.
- Signatures: The agreement requires each parties’ signature which must be in the presence of an independent witness, ideally their respective legal advisors.
- It is crucial that parties seek advice from a solicitor experienced in family law and prenuptial agreements. This will ensure the agreement covers all the relevant details, that parties have been fully advised about the implications of the agreement and minimises the risk of it being challenged in the future in the unfortunate event of divorce.
Who Can Write a Prenuptial Agreement?
Understanding and navigating prenuptial agreements can be complex. Drafting prenuptial agreements should be done by a solicitor who is experienced in family law. Attempting to draft a prenuptial agreement without specialist legal advice is risky and should be avoided as it significantly increases the chance of the agreement being reduced in the future.
A potential future challenge to the content of a prenuptial agreement would be far less likely to be considered by a Court where both parties have had the benefit of separate and independent legal advice when drafting the agreement. Engaging an experienced and knowledgeable solicitor is highly advised. It is the most effective method to safeguard your assets and interests, given their comprehensive understanding of how pre-nuptial agreements work.
The guidance of a legal professional is strongly recommended to guarantee the enforceability of the agreement, the protection of your interests, and to avoid protracted court proceedings.
Are premarital agreements enforceable in Scotland?
In Scotland, properly crafted prenuptial agreements generally possess enforceability and legally binding status. This encompasses the crucial aspect of ensuring that neither party experiences undue pressure to agree to a prenuptial arrangement and both have time to consider the drafted agreement prior to the marriage.
How to make sure your prenuptial agreement is legally binding?
It is very important that specialist legal advice is sought when considering the terms of a prenuptial agreement. Both parties should ensure that they have had the benefit of separate and independent legal advice.
This will ensure there is limited scope for the agreement to be challenged in the future. Where an agreement has been properly drafted and meets certain requirements when it is entered into, it is very likely to be upheld in the event it were to be challenged in a Scottish Court, which will avoid protracted court proceedings in the event of a divorce.
It is important that there is no pressure on the parties to sign the agreement and it is not signed too close to the wedding. The terms of the agreement must be fair and reasonable when it was entered into and should not depart significantly from the legislative framework which sets out what is to happen in the event of separation.
The agreement should discuss the parties’ financial arrangements ranging from business assets, property owned and any other assets separate to the marriage.
How long does a prenuptial agreement last?
A prenuptial agreement will define its duration. The agreement may include clauses specifying a future termination date, such as an agreement only being applicable for the first 10 years of marriage.
Contact our Family Law team
For any needs related to prenuptial agreements, get in touch with our experienced family law specialists. Our team is experienced in creating both prenuptial and postnuptial agreements. We understand that marriage is a significant step in life, and we aim to provide you with the assurance and peace of mind you need. Contact Harper Macleod today and let our expertise guide you through this crucial process.
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