Pre-nuptial Agreements in Scotland: How robust are they?

Pre-nuptial Agreements are often misconstrued as only relevant to celebrities and high-net-worth individuals such as Kevin Costner or Jennifer Lopez, who have both had high profile divorces this year. However, Pre-nuptial Agreements are often just as relevant for non-celebrities.

If correctly prepared, Pre-nuptial Agreements are an effective tool to protect assets owned by you prior to your marriage, in the event of future separation or divorce. Pre-nuptial Agreements can “ring fence” assets and give you the peace of mind, that no matter what happens during your marriage, those assets will be excluded from the matrimonial property to be shared on separation or divorce. This can be particularly helpful for clients with children from a previous relationship, who want to provide for those children in the event of death. In conjunction with a will, a Pre-nuptial Agreement can help you plan for the future.

Whilst we know Pre-nuptial Agreements are not romantic, they do provide couples with a sense of security and certainty, lead to less acrimonious separations, and save legal expense in the long run.
Pre-nuptial Agreements are recognised and enforceable in Scotland, that is, if they are drafted and entered into carefully. However, that is not to say that they are exempt from legal challenge in terms of their validity. The Scottish legislation provides the Court with the power to set aside or vary a Pre-nuptial Agreement where the agreement “was not fair and reasonable at the time it was entered into”.

Scottish Courts will not overturn a Pre-nuptial Agreement lightly. The Courts are generally reluctant to set aside agreements which have been validly entered into by parties. The onus of proving that the agreement was not fair and reasonable at the time it was entered into rests with the party seeking to have the agreement overturned.

This then leads to the question of what makes an agreement “not fair and reasonable at the time it was entered into”?

When assessing if the Pre-nuptial Agreement entered into was “fair”, the Court looks to how the agreement was reached. The Court will consider all of the relevant circumstances leading up to and prevailing at the time of the execution of the agreement. Like any contract, the Court will consider if there has been undue influence of one party over another when entering the Pre-nuptial Agreement. For instance, if one party has taken unfair advantage of another, or has made a threat to induce the other party to accept the terms of the Pre-nuptial Agreement. The Court will also consider whether the parties have received legal advice, and the nature of the legal advice that parties have received. The Court will further look to whether the parties have had proper time to consider the agreement before their date of marriage.

When considering the reasonableness of the agreement, the Court examines the terms of the agreement and what it achieves. The fact that a Pre-nuptial Agreement provides for a very unequal division of assets does not by itself suggest that the agreement was not fair and reasonable at the time it was entered into. For example, in a relatively recent case, the Scottish Court overturned a Pre-nuptial Agreement in a case with extreme circumstances, involving an abusive relationship between the parties. The Pre-nuptial Agreement in this case left the husband with only 6% of the matrimonial property. In making its decision to set aside the agreement, the Court was persuaded by the fact that the agreement was rushed through, with limited legal advice obtained by the parties.

If you would like more information about Pre-nuptial Agreements or advice in relation to any Family Law matter, please contact Macleod & MacCallum’s dedicated and specialist Family Law team on 01463 239393 or by email at family@macandmac.co.uk.