Relationship Arrangements

Most couples don’t enter into a relationship anticipating that it will end, however prior planning and expert advice can help minimise the stress and expense should your relationship break down in the future.

There are various relationship agreements you can enter into;

• Cohabitation Agreement
• Pre-nuptual Agreement
• Post-nuptual Agreement
• Separation Agreement

Cohabitation Agreements

The number of cohabiting couples continues to grow faster than the number of married couples, and statistically such relationships are more prone to breakdown than marriages are. However contrary to what many believe, a “common law husband” or more usually a “common law wife” in the UK is an urban myth, meaning that cohabiting couples do not have the same protection as married couples. Although the Law Commission has recommended there should be similar remedies available to cohabiting couples as there are for married couples, this is presently not the case. So when unmarried relationships break down, there may be complex and costly legal disputes over property rights if there is no prior agreement in place.

What is a Cohabitation Agreement and who is it for?

A Cohabitation agreement is a legal agreement reached between people who live together who want to set out what would happen in certain circumstances, for example, if a relationship breaks down, someone passes away, goes bankrupt, or simply change their minds and “want out”.

These agreements are generally made between couples, but Declarations of Trust can also be prepared by Laceys for co-owners of property, such as family members lending money for a purchase. Whenever multiple people own a property, it’s crucial to have a Declaration of Trust. This document clarifies the share of ownership each person holds, whether they are in a personal relationship or are business partners investing in property or acquiring premises for trading.

What does a Cohabitation Agreement cover?

Exactly what is covered in a cohabitation agreement depends on the couple’s particular circumstances, but it could include:

• Clarification of property ownership and responsibility for the payment of outgoings
• Whether any financial contribution will contribute to sharing of ownership of the property
• The division of contents
• What is to happen upon the ending of the relationship and according to how that may occur

Additionally,  both parties should update their Wills to to align with the terms of  the Cohabitation Agreement.

Where two people own a property jointly, they may agree that when one dies, the survivor should automatically become owner of the deceased’s share. This is known as a right of survivorship and it operates independently of any Will that the deceased person may have made. Alternatively, they may agree that when one co-owner dies, his or her share should be inherited by the persons he or she has named in his or her Will. It is for the couple to decide which of these alternatives they want.

Where one of a couple dies having failed to make a Will, there are statutory provisions in the Inheritance (Provision for Family and Dependants Act) 1975 to enable claims to be made for the benefit of a dependant including cohabitees of a relationship of over 2 years duration, a surviving spouse, children and other relatives.

Pre-nuptual Agreements

Pre-nuptial Agreements are commonly associated with the rich and famous however any couple in which one party brings personal or business assets into a marriage or civil partnership can benefit from having one. This is especially important today with the average age for entering into marriage getting older (38 years for men, 35.7 years for women) along with 42% of marriages unfortunately ending in divorce (Office of National Statistics 2012). Before entering into another marriage, an individual who is divorced can take steps to protect assets that were acquired during their previous marriage.

A Pre-nuptial Agreement or Pre-civil partnership agreement is a formal, written agreement between two partners prior to their marriage which makes clear provisions as to how their property is to be shared or kept separate in the event of a divorce or dissolution of civil partnership. A Pre-nuptial Agreement is bespoke to the parties individual circumstances but can provide peace of mind if any of the following applies to either party;

• You have inheritance (or future inheritance) you want to protect;
• You are bringing assets and/or property to your marriage that you wish to preserve as your own;
• You have children from a previous relationship and want to ensure certain assets are reserved for them and protect their inheritance rights;
• You own a business which you would like to keep under your control;
• You have been married previously and wish to preserve your first marriage settlement;
• If either party has pre-marriage outstanding debt that the other party doesn’t want to become liable for it to be repaid by them.

We understand this is a highly sensitive document and will always ensure that the agreement accommodates our clients’ best interests and that both parties have full knowledge and understanding of the terms and effect of the agreement before it is entered into. We also ensure that our clients are aware of additional steps which may need to be taken in the future if there is a change in circumstances. If you and your bride or groom-to-be require a Pre-nuptial Agreement we advise you to contact us at least 3 months prior to your wedding day, to give us sufficient time for proper discussion to take place over the preparation of the Pre-nuptial or Civil Partnership Agreement .

Within England and Wales Pre-nuptial Agreements are binding within divorce as long as both parties entered into the agreement freely and they have a clear understanding of the consequence of the agreement in the event of relationship breakdown. The Family Court will give full consideration to the terms of the Pre-nuptial Agreement when deciding upon the settlement of assets and income between the spouses or civil partners who entered into them. The existence of a Pre-nuptial Agreement should considerably reduce the legal costs relating to obtaining a Financial Remedy Order upon the breakdown of a marriage or civil partnership compared with when there is none in place as even if it does not provide a complete solution this will narrow the areas of disagreement to be determined by a court.

Post-nuptual Agreements

In circumstances where a Pre-nuptial Agreement has not been agreed prior to marriage, or the period between the date of the Pre-nuptial Agreement and the date of the marriage has been short Laceys can provide advice on Post-nuptial agreements, a legally binding contract that details how specified assets are divided and how liabilities are shared in the event of a divorce. The main difference between a Pre-nuptial Agreement and a Post-nuptial Agreement is timing: a pre-nup is entered into prior to marriage; a post-nup during the marriage however for either agreement to be upheld in court, should there be a future claim, the following conditions need to have been met;

1. Both parties must enter into the agreement of their own free will; 
2. Both parties must disclose full details of the financial situation
3. Independent legal advice for both parties needs to have been taken

If you’re going through a big change in your life, for example buying into a business, having children, investing in property, and you haven’t entered into a pre-nup, we would recommend considering entering into an post-nup agreement to protect you later, should your relationship breakdown.

Separation Agreements

If you have separated from your partner but are not ready for divorce or dissolution, a separation agreement can be put in place to set out the financial arrangements and responsibilities of each party and to deal with arrangements to be made for any dependent children.

This can include;

• Freedom from interference by either party in the life of the other from the date of agreement;
• Who is going to live in the family home and any arrangements to sell either immediately or in the future;
• How financial and business assets are divided;
• Decisions made in relation to cars or furniture or any other items of household contents;
• How existing debts and any other ongoing financial obligations will be paid;
• Maintenance payments for children;
• Child arrangements – where and who they live with, what time they are to spend with the other parent and arrangements for the school holidays and special occasions;
• Future planning for divorce or dissolution of civil partnership where applicable.

If you come to the decision that you wish to divorce at a later date, a Separation Agreement can often be made into a financial consent order within any future divorce proceedings. However, that is only if legal advice has been taken by both parties and there has been full disclosure of your financial positions at the time the agreement was signed which can be dealt with in Schedules to the agreement.

If you are would like any further information or are considering setting up one of these agreements, please call one of our team today.