Agreements

No one expects something to go wrong but if you think about it you wouldn’t book a round-the-world cruise without making sure your holiday insurance is securely in place. Many individuals are now taking a sensible approach to living together and marriage ensuring that in the event of a separation, both parties know exactly what will happen.

If you are planning to buy a property with your partner, or are already living with them in a property that one of you owns, you should consider having a Living Together Agreement or Cohabitation Agreement which records what property you each own at the start of your relationship and how you intend to manage your finances such as paying the mortgage while you are living together. Creating a cohabitation agreement is important because there is still no law in England and Wales that allows for the assets of cohabiting couples to be divided after a separation in the way that they would be after marriage. After a divorce, the law looks to share the family assets along principles of need and fairness which take a starting point of an equal division, irrespective of who legally owns any property, but the same law does not apply to couples who have not married. If you separate after living together the general rule is that you leave the relationship with any property or other assets, such as savings or investments, that you legally own in your name. This can often result in a sense of unfairness or hardship, particularly if one of you
feels you have made significant contributions in terms of financial or family commitment, such as looking after the home or family, which is not reflected in how you own the assets.

A Pre-marital agreement, more widely known as a Pre-Nuptial Agreement is a contract which is entered in by both parties, and it covers each person’s legal rights and shows the division of assets in the event of a death or divorce. Amongst all of the excitement of wedding planning, it can be easy to forget exactly what you are committing to. Marriage is a legal relationship. When you get married you promise to share your life, and everything you own and have worked for. Both parties' assets are combined into one shared matrimonial pot and this could include your lifelong savings, property you have previously owned and pension you have acquired before you met. So if the marriage doesn’t work out as planned and no steps have been taken to protect assets and plan for this eventually it is not uncommon for there to be arguments about who gets what and this is often the reason why divorces turn into lengthy, expensive legal battles.

Protecting yourself against this risk is not unromantic, or selfish but sensible and necessary. Cohabitation Agreements/Living Together Agreements and Pre Nuptial Agreements can be prepared under a relatively low fixed fee usually between £500 and £750 plus VAT – would you spend £500 plus VAT to protect a property worth thousands or your pension worth more?

Pre-nuptial agreements are typically used by people who want to protect their wealth for their children or people entering a second marriage. Following a Supreme Court decision in 2010 Pre-Nuptial Agreements can be binding providing they are not unfair and are properly drawn up with full financial disclosure and appropriate legal advice.