It may not be the most romantic thing to say as we celebrate the first anniversary of the Royal Wedding of Prince William and Kate Middleton, now better known as the Duchess of Cambridge, but some pragmatism and common sense can play an important role in providing peace of mind if the fairytale goes wrong. Taking the time to ensure that both parties in a developing relationship know exactly where they stand can save a great deal of animosity and soul-searching later. This is especially true in relationships where there may be additional considerations: does Prince William have any family heirlooms tucked in an attic he needs to specifically protect? What should he do to ring-fence his share of the family firm?
Celebrities are making increasing use of pre-nups. Rumour has it that Tom Cruise and Katie Holmes signed a Pre-nuptial Agreement which provided that for each year of the marriage Katie would collect $3million if the marriage failed. After 11 years the Pre-nup would no longer apply and she would collect half of Tom’s fortune.
And pragmatic Scots seem to agree with this approach. Pre-nuptial Agreements in Scotland are increasing in popularity and, rather than being regarded with suspicion, they are now finding their proper place in prudent financial planning.
In Scotland, where around 10,000 marriages ended in divorce last year, Pre-nuptial Agreements have been accepted by the Courts for some time.
A “Pre-nup” is not designed to disadvantage one party and advantage the other in the event of their union breaking down. The agreement should be ‘fair and reasonable at the time it is entered into’ and if it is it will be difficult to challenge later.
To be fair and reasonable in Scotland both parties should have plenty of opportunity for separate legal advice. Assets will need to be properly identified in the Agreement and the intentions of both parties clearly reflected.
Pre-nuptial agreements are commonly used to protect or ring fence assets owned before marriage or gifted or inherited during the marriage. This is particularly relevant where assets include shares in family business or interests in partnerships. With the trend for second and/or later marriages, and more complicated family arrangements, many future spouses or civil partners have accumulated wealth at the time of marriage and very often children from previous relationships.
DOS & DON’TS
- DO consider a pre -nup if you already have assets of your own, particularly business assets
- DO give details of all your assets
- DO get proper legal advice
- DON’T feel you are being betrayed. Pre- nups are smart and sensible
- DON’T leave it to the last minute
- DON’T be like Steven Spielberg and Amy Irving, who wrote their Pre-nup on a cocktail napkin. The judge deemed it to be invalid. It is doubtful if either had proper legal advice
If you would like to discuss pre-nuptial agreements please contact a member of our team.