The wedding season is now in full swing and for many couples there has been a long wait for their big day due to Covid-19 restrictions. When planning a wedding there are a number of important matters to organise, but is entering into a prenuptial agreement on your 'to do' list?

Agreements of this nature are becoming increasing common. These are contracts entered into prior to marriage which enable the couple to regulate financial matters in the event of a breakdown in their relationship. The agreement can provide that the assets held by each of the spouses prior to the marriage (and anything deriving from those assets), will not form part of the matrimonial 'pot' to be divided on divorce.

This is particularly important for farming families, where a business or partnership may have been built up over generations. If this business or partnership finds its way into the 'pot' to be divided on divorce, this could have significant consequences not only for the divorcing spouse, but the family as a whole.

The legal position on divorce is that assets acquired prior to the marriage, or those gifted by a third party or inherited during the marriage do not form part of the matrimonial property to be shared on divorce. The difficulty arises when the 'non matrimonial' asset changes form. This can happen all too easily.

Take, for example, a situation where shares in the family business or an interest in the farming partnership is held by a spouse prior to the marriage or is received by him or her by way of gift or inheritance during the marriage. In that scenario, the value of the shares/ interest in the partnership does not form part of the spouse's claim on divorce. However, if a share restructure or a change in the partnership was to take place during the marriage, this could inadvertently lead to this asset falling into the 'pot' to be divided between the couple. Whilst arguments can be advanced to seek for account to be taken of the fact that the spouse's shares/ interest in the partnership would not have been available on divorce had it not been for the change to the business/ partnership, this argument is not failsafe and there is no guarantee of success.

A pre-nuptial agreement can ensure that in the above example, the shares/ interest in the partnership (and anything flowing from this) is ringfenced in the event of divorce. This gives the couple protection should they transact with their 'non- matrimonial' assets during the marriage and avoids prejudicing, for example, the family farming business in the event of a breakdown in their relationship.

Whilst discussing a pre-nuptial agreement with a loved one is perhaps not the most romantic of conversations in the lead up to a wedding, it is prudent to put such an agreement in place for the reasons outlined above. It is advisable to do so as far in advance of the wedding as possible to ensure that there can be no suggestion that pressure has been applied in signing it. The spouses will require to obtain separate legal advice, or at least have had the opportunity to obtain this advice. These steps provide protection from any challenge to the agreement. The costs associated with putting an agreement in place are modest in comparison with the fallout from a situation where the family business finds itself forming part of the claim on divorce.

If the marriage has already taken place, all is not lost, and a post-nuptial agreement can be prepared in similar terms to a pre-nuptial agreement. It can also, for instance, be used to regulate a specific transaction.

Rachael Noble is an Associate solicitor at Brodies LLP. She is accredited by the Law Society of Scotland as a Family Law Specialist and a Family Law Mediator and assists clients with all aspects of relationship breakdown, including divorce, dissolution of civil partnership, cohabitation and child law as well as the preparation of pre-nuptial, post- nuptial and cohabitation agreements.


Rachael Noble

Senior Associate