There is a growing trend for people in their 40’s and 50’s to seek a pre-nup before they marry.
Unlike the typical pre-nup for a first marriage, this will not be about one party only wanting to preserve their wealth, but instead both husband and wife-to-be are keen to have a silver pre-nup.
Why do people want a silver pre-nup?
Both parties are likely to come in to the second marriage with property of their own, children from a previous marriage with a much greater awareness of the costs and emotional drain of a disputed divorce action.
By entering into a silver pre-nup they can protect the property they bring in to the marriage with them, not only from divorce, but also the laws of inheritance – ensuring that their estate upon death is inherited by their own children and not by their spouse’s children.
What should a silver pre-nup provide for?
The normal Scottish approach to pre-nuptial agreements is to keep it simple and aim to protect non-matrimonial property, such as pre-marriage funds which have been brought in to a marriage.
In a silver pre-nup we will usually ring-fence pre-marital assets and allow for their value to be traced back, even if they had been invested in a joint project. This way, both spouses can protect the wealth they brought with them into the marriage, even if that wealth has been mixed with the other spouse’s property, such as in the purchase of a joint matrimonial home.
The other thing a silver pre-nup usually provides for is a mutual discharge of rights of inheritance. Scots law of inheritance provides for certain rights on inheritance for a spouse, even if no provision has been made for him or her in the deceased’s will. By discharging these rights of inheritance we ensure that each spouse can enjoy total control over the fate of their estate on death – and if they want to leave their entire estate to the children, they can, without any claim from their husband or wife.
What are the limitations of a typical silver pre-nup?
Whilst silver pre-nups are useful for protecting capital assets, they cannot be used to waive (or even limit) claims for maintenance in the event of a subsequent divorce. This is because a pre-nuptial agreement has to be fair and reasonable at the time it is entered into. Scots law does not consider it either fair or reasonable to place any restrictions on a spouse’s rights to claim maintenance upon separation.
Although it is competent to provide in a pre-nuptial agreement for a party to trace back pre-marital assets which have become matrimonial property, it is much harder to be given credit for pre-marriage assets which are no longer there in any form because they have been spent on things like holidays or failed investments. Both parties should therefore be careful to ensure that income is used for spending on holidays etc and that whatever happens to pre-marriage assets during the marriage, they should still be clearly identifiable in the event of separation.