Prenups and wills: why you should consider them

Prenups are often in the news, but they’re not just for the rich and famous. Nicola Neal and Nicola Kerr explain why you should consider both if you’re getting married or entering into a civil partnership.

Recent cases in the media have brought the importance of having a wedding rings will to the forefront of people's attention. The sudden death of Prince, followed by the announcement that he died without a will, serves as a stark reminder that a will is an essential tool for ensuring that your personal affairs in order.

You may feel that Prince is a rare exception, given the sizeable nature of his estate. However, it is a common misconception that people with relatively small estates do not require a will. Having a professionally drawn up will is essential, regardless of the level of your wealth, and brings many advantages:

  • A will allows you to control the distribution of your assets and wealth after your death. If you die without a will (intestate), the law (as opposed to you) decides how your estate is distributed, and these rules may not accord with your wishes. Close friends or any charities you may feel passionately about will be disregarded, potentially in favour of distant relatives. If no beneficiaries are identified, the entire estate goes to the Crown.
  • With a will, you get to choose those who will administer your estate (executors).
  • In Scotland, unmarried partners (cohabitants), unlike spouses/civil partners and children, have no automatic entitlement in their deceased partner’s estate. All they have is a right to apply to the Scottish courts for financial provision within six months of their partner’s death. This process is expensive and stressful, and there is no guarantee that the surviving cohabitant will actually receive anything.
  • In Scotland, the age of legal capacity is 16 (compared with 18 in England and Wales). A will lets you appoint guardians to look after your children, should you die before they reach this age. It is also possible to make financial arrangements for your child’s benefit in your will, for example, by including a trust that holds money to assist with their education.
  • If you have remarried but have children from a previous relationship, your will can be structured in a way that benefits everyone.
  • Having a will can save money and time; intestate estates are more often than not more expensive and time-consuming to administer.
  • A will can be a very useful tool for mitigating inheritance tax.

Prenuptial agreements: what are they, and why should I consider one?

While a will is a necessity regardless of your personal circumstances or wealth, it is often assumed that prenuptial agreements are only necessary for the rich and famous. But this is simply not true.

A prenuptial agreement is a form of financial planning and asset protection that should be considered by anyone who is getting married or entering into a civil partnership. Many view them much like they do an insurance policy – it's hoped that it won't be needed, but it's in place in case it is.

Prenuptial agreements are routinely entered into, and though they have never been fully tested in the Scottish courts, it is widely recognised within the legal profession that such agreements would be enforceable, providing various conditions are satisfied.

The purpose of a prenuptial agreement is generally to provide a degree of certainty in respect of the distribution of assets in the event of a future separation or divorce. There are many different reasons for entering a prenuptial agreement, and some of the common reasons include:

To protect pre-marital wealth

Many people are entering into their first marriage later in life and have accumulated significant assets by the time of marriage, so they may wish to protect those assets (especially if those assets are likely to change form during marriage). There are also those who have been through a divorce or relationship breakdown previously and are ‘once bitten, twice shy’, so they wish to enter their next marriage knowing that certain assets are not going to be in the matrimonial pot, in the event of a future separation or divorce.

To protect family wealth and ensure that it passes down the respective family lines

Whatever your circumstances, if you have assets already, or expect to receive assets in the future, and you wish to protect those assets, a prenuptial agreement should be considered as part of your overall financial planning exercise.

Accordingly, it’s advisable to put a prenuptial agreement on the to-do list before anyone says “I do”.

About the author

Nicola Neal is a senior solicitor, and Nicola Kerr is an associate, at Brodies LLP.