We have all heard or read in the papers about pre-nups and tend to think they are only for the rich and famous, something more suited to Hollywood than us. More and more frequently couples in the UK are signing a prenuptial agreement. Some of the most common reasons couples cite are:
- to protect assets which they may have inherited
- to ensure children from a previous relationship are provided for
- to ensure that they retain certain items of sentimental value such as jewellery
- where there is a business to protect
- if one party is significantly wealthier than the other
- to ensure a non-acrimonious division of assets should a separation occur
What is a prenuptial agreement?
A prenuptial agreement is basically a contract signed by two people before they get married or enter a civil partnership. It clearly sets out what property and money belong to each party before the partnership, what the intention is during the partnership as well as what should happen to these assets should the relationship come to an end. It is a practical way of simplifying life after the relationship ends.
Are prenuptial agreements legally binding?
Strictly speaking, prenuptial agreements are not legally binding in the UK. This means that a court is not compelled by law to uphold them, although they will always carry weight. However, in reality, provided they are fair and have been entered into willingly at least a month before the marriage or civil partnership, are drafted with the correct considerations, and witnessed, then it is likely that a court will follow the prenuptial agreement if called upon to decide on a financial settlement following separation.
When entering a prenuptial agreement, the parties should provide full disclosure of their respective assets and liabilities and obtain independent legal advice.
Should I get a prenuptial agreement?
Once you are married you and your spouse or civil partner have a different legal status to your single self. In practice, this means that any assets owned before the marriage as well as those accumulated during the marriage can be treated the same way and divided between the two of you in the event of a divorce or separation.
By contrast, a prenuptial agreement means that you can identify specific assets that belonged to you prior to the partnership and make sure that ownership of them will always reside with you. The prenup can also make agreements regarding existing or future pets and children. If you are unsure of what to do, an experienced lawyer can help you decide if a prenuptial agreement is right for you at this time.
What is a cohabitation contract?
With more and more people preferring to live together rather than getting married, it may be surprising to know that the law does not recognise this partnership in any other way than a civil contract between two independent people. Married people have the protection of the Matrimonial Causes Act and courts who are willing to make orders which are fair in the circumstances. Cohabitees have no such protection, and the law of property governs their situation. The decision of the courts can only be based on fact and there is little scope for them to make a decision which is fair and just in the circumstances.
A cohabitation contract is a flexible agreement between you and your partner regarding finances and may include additional practical arrangements.
Before getting a cohabitation contract drafted you should think about your current joint and individual responsibilities such as the mortgage or rent, childcare costs, and other household bills, and how you want to divide them. You should also consider what might happen in the event that the cohabitation comes to an end. A cohabitation contract is a legal contract and therefore is enforceable in law. A cohabitation agreement can include:
- the couple’s financial obligations towards each other including who pays what
- ownership of items such as a car, pets, a business, and property
- details of how joint bank accounts, additional finances or other assets should be treated if the relationship breaks down
A cohabitation agreement can be drawn up at any stage of the relationship and can be amended or updated at different stages in life, for example, when thinking about having children, buying a house, etc.
Co-habitation and joint property purchases
If you purchase property jointly and do not stipulate what percentage your interest is held in the property, the law assumes you own it equally. It is irrelevant who has paid the deposit, who paid for any improvements or who paid for outgoings relating to the property.
An agreement can contain terms about issues the court has no authority to determine. For instance, who is to remain in the property until it is sold, how the outgoing person will be compensated if the property is transferred into the other party’s name, and who is to pay the mortgage and other household expenses in the meantime. These are some of the issues that should be discussed, agreed upon, and documented in an agreement.
It may seem unnecessary to have an agreement while a relationship is stable, but there are no guarantees in life. We can help you draw up a binding agreement to cater for life’s uncertainties and to help protect you and your loved ones.
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