Prenups across the border: Scotland vs England & Wales

It used to be the case that prenuptial agreements were very much thought of as just being for the rich and famous. That is, however, no longer the case. A prenuptial agreement is a sensible consideration in advance of any marriage.

Very simply, a prenuptial agreement sets out what will happen in the event of a future separation and / or divorce. A prenup is just like an insurance policy – hopefully you never need it, but it is there if you do.

Issues can however arise when a couple have assets in multiple jurisdictions as not all jurisdictions take the same approach to prenups. The same relationship but a different legal landscape can give rise to the potential for confusion, complexity and expense.

This article seeks to demystify the similarities and differences between Scotland and our closest neighbours, England and Wales.

The Scottish approach

Scotland has a distinct legal system to that of England and Wales and the judicial attitudes in each system differ, especially in relation to prenups.

For a prenup to be valid in Scotland it must fulfil three tests:

1. It must be fair and reasonable at the time it was entered into.
2. Both parties must have the opportunity to take legal advice before signing.
3. There must be no pressure on either party to sign.

Fairness and reasonableness will very much depend on the whole circumstances of each individual case. There is sometimes a misconception that prenups protect the wealthier party at the expense of the other. While is it the case that prenups can be used to protect assets, they can also ensure certainty and fairness for both parties. A prenup cannot be presented by one party to the other on the eve of the wedding. Adequate time to take advice means that it needs to be drafted and signed well in advance.

In Scotland the court will be slow to overturn an agreement. The courts are reluctant to interfere with freely negotiated agreements. Provided the three tests set out above are satisfied, the prenup should survive any future challenge.

In Scotland the focus is very much on whether the agreement was fair at the time of signing rather than at any point in the future.

In Scotland, unless the prenup provides otherwise, it will remain in full force and effect notwithstanding any change in circumstances such as the birth of children, either party becoming unwell, being made redundant or taking a career break. It is possible to provide within the prenup what will happen in the event of a material change in circumstances, such as those mentioned. However that is much less common and instead the focus on a prenup in Scotland is usually to “ring fence” assets (usually acquired before the marriage or by of inheritance or gifts from third parties) to stop them becoming part of the matrimonial property and therefore subject to fair sharing between the parties in the event of separation and divorce in the future.

How England and Wales differ

In contrast, the legal treatment of prenuptial agreements in England and Wales is that they are not strictly binding, although they are highly persuasive and can carry decisive weight if certain safeguards are met. These include:

• Both parties entering into the agreement freely, without undue pressure;
• A full and frank disclosure of each party’s financial position;
• Each party receiving independent legal advice; and
• The agreement being executed in good time before the wedding.

The overarching consideration for the courts in England and Wales is fairness, with the starting point being equality. Unlike in Scotland, where the focus is on fairness at the time the agreement is entered into, the courts in England and Wales will consider whether it is fair to uphold the agreement at the point of divorce. This allows for greater judicial discretion, particularly where circumstances have changed during the marriage.

Crucially, in England and Wales, a prenuptial agreement cannot override the court’s duty to meet the reasonable needs of the parties and any children. For example, even where a prenup seeks to exclude claims entirely, the court may depart from its terms to ensure that housing and income needs are adequately provided for. For this reason, it is advisable to review and update (if necessary) prenups in England and Wales in light of changes in circumstances to ensure needs are routinely being considered and met.

Why jurisdiction matters

Jurisdiction is crucially important. It is not uncommon for parties to live, work and own property in different parts of the UK. It is also not uncommon for parties to be able to competently raise divorce proceedings in both Scotland and in England & Wales. In the event of a dispute, the last place that the couple lived together as a married couple would win the jurisdiction battle. However, that is not always what the couple would want. It is therefore imperative that any prenup includes a clause choosing the law which is to govern the agreement and also a choice of forum.

It is advisable, where divorce proceedings could be raised in other jurisdictions, or where assets exist elsewhere, that you take advice from a lawyer in the relevant jurisdictions. This is particularly important in cases where the parties have a connection to England and Wales since the financially weaker party may seek to invoke the more discretionary and needs-based approach of the English and Welsh courts under a Part III application, notwithstanding an existing agreement or judgment.

Final thoughts

Ultimately, a prenup helps couples entering a marriage or civil partnership agree on fair, reasonable terms should the relationship end. Early advice from a specialist family lawyer or lawyers is key to ensuring any agreement reflects both parties’ intentions and stands up to scrutiny.