Prenuptial, Cohabitation & Separation Agreements
Agreements and How To Protect Your Assets
In the first flush of romance the last thing you are likely to consider is how to protect your assets should the relationship break down. While financial matters are not considered romantic, increasingly people are realising that it just makes good sense to protect yourself should the unthinkable happen.
There are five main types of legal agreements to consider :
Prenuptial agreements – These have become very famous in the USA and Europe. They are entered into prior to a marriage in an attempt to agree what will happen should the marriage end. The intention of a ‘pre-nup’ is to make the process of the end of a marriage more straightforward, reduce the emotional aftershock and also to protect either party from the other person who may be acting in an unreasonable manner due to the marriage breakdown.
Whilst these are not yet completely binding upon the courts in England and Wales, the court will need good reason to depart from the agreement reached between the parties when determining matters, especially those of a financial nature.
Post nuptial agreements – As the name suggests, these are entered into after the marriage but before the marriage breaks down. It may, for example, be appropriate if one party receives an inheritance during the marriage and wants to protect this. They are currently treated in the same manner as pre nuptial agreements.
Cohabitation agreements – Unmarried couples who are living together will benefit from a cohabitation agreement. They regulate contributions to the property, such as mortgage payments or improvements and how these should be treated upon the relationship ending. They can also specifically state that despite any contributions made, one party is to receive no interest in a property. This will protect someone whose boyfriend or girlfriend is moving in with them.
However, it can also provide for an intention that someone does obtain an interest in the property and on what basis that interest is to be calculated. At the end of the relationship should there be an issue about interests in a property it’s worth remembering that court proceedings to resolve the issue are likely to be extremely expensive. A cohabitation agreement can be invaluable in avoiding huge expense.
Separation agreements – A separation agreement is entered into at the end of a marriage but before actual divorce proceedings are commenced. The agreement records how the parties’ assets are to be divided between them and whether there will be any ongoing financial support offered by one party to the other. The agreement can also confirm that neither party has any entitlement to the other’s assets and possessions. Again, whilst they are not binding on the court, should divorce proceedings subsequently be taken, the court will need a good reason to depart from the agreement that both parties have signed.
Consent Order – A consent order is a record of agreement reached between the parties as to the division of their assets upon divorce. A consent order will be approved by the court upon divorce and is binding upon the parties. A consent order can record who is to get what upon the breakdown of the marriage, or simply confirm that neither party is entitled to any of the other’s assets or income. It is worth noting that divorce does not automatically end the financial claims that ex-spouses have upon each other and there have been many cases which have allowed one spouse to claim for financial support from their ex-spouse many years after the divorce is finalised.
Consent orders are useful tools to ensure that any financial support agreed between the spouses is protected, or to ensure that all financial ties between spouses are severed.