cash clinic: the benefits of signing on the dotted line before exchanging the rings

20th March 2010

The Scottish private client and financial services team answer your queries, this week: the benefits of signing on the dotted line before exchanging the rings.

Q I am due to get married in the summer and my fianceé has suggested that we speak to a lawyer and draft a pre-nuptial agreement.

We've been living together for over ten years, are equal partners in our own business and have two properties, one of which we rent out. We also have about £600,000 in savings and pensions, a couple of sports cars and two retrievers. My fianceé is older and has two children from a previous relationship.

I hadn't considered a pre-nuptial agreement previously. What factors should I take into consideration to make sure I'm properly looked after should our marriage breakdown?

A In making financial provision on divorce, the courts will divide matrimonial property fairly – usually equally – between the parties. Matrimonial property comprises all property belonging to the parties or either of them at the relevant date (usually the date of separation) which is acquired before marriage for use by them as a family home, or during the marriage but before the relevant date. Where the two parties do not wish assets to be divided in this way, a pre-nuptial agreement can exclude certain assets.

In these particular circumstances, the house in which you and your fianceé currently reside (provided this was bought as a family home), together with any benefits under a pension accrued by either party during the the marriage would be considered matrimonial property. As such, these would be likely to be divided equally on divorce, unless a pre-nup agreement provided otherwise.

Neither the second property nor any pension rights accrued prior to the marriage or after the relevant date would be required to be considered in the agreement, these not being considered matrimonial property.

The business in which you and your fianceé own equal shares would not be classified as matrimonial property, so you could decide not to include this in the agreement. However, it might be sensible to include it to ensure that any alteration of parties' shareholdings during the marriage (which might in other circumstances be considered as matrimonial property) could also be excluded.

In relation to your savings, sports cars and retrievers, in the absence of evidence to the contrary these would be presumed to be owned separately by the parties. Due to problems of proof of ownership many years after the date of purchase, it would be beneficial to include details of ownership in the agreement.

It is generally thought that pre-nups are enforceable in Scotland, a position strengthened by a recent English case in which the terms of such an agreement were followed. However, the law in this area is largely untested and it is not possible to advise with any certainty that the terms of an agreement would be upheld. Nevertheless, pre-nups are a good way to achieve a more certain outcome in the event of a marriage breakdown.

Cath Karlin is a partner specialising in family law in the private client and financial services department of HBJ Gateley Wareing