When embarking on significant life events—whether moving in with a partner, planning a wedding, or navigating a relationship breakdown—it’s easy to overlook the legal considerations that can shape long-term outcomes. Family law agreements such as Pre-Nuptial and Post-Nuptial Agreements, Cohabitation Agreements, and Separation Agreements play a crucial role in providing clarity, protecting assets, and fostering transparency between parties. This article will explore who may benefit from these agreements, why they are essential in various circumstances, and when they should be considered. By addressing these points, we aim to highlight the importance of proactive planning in safeguarding personal and financial interests throughout different stages of a relationship.
At the outset of a relationship
Often the practicalities and sheer joy at moving forward in life when buying a house together and/ or planning a wedding detract from the legal considerations. These considerations can often have significant, long- term implications – which should ideally be an additional focus, particularly where these is any degree of wealth as between the parties and in the wider family estates.
Pre-Nuptial Agreements
Up until around 15 years ago, Pre-Nuptial Agreements were regarded as being something only used by celebrities, sports people, the fabulously wealthy and the aristocracy.
However, following a landmark case in the Supreme Court in October 2010 and subsequent case law developments, Pre-Nuptial Agreements have been used increasingly and there is a raft of case law evidencing how the Family Court has tested the validity of such Agreements.
The general view is now that the Family Court will likely give effect to a Pre (or Post) Nuptial Agreement that is freely entered into by each party with a full appreciation of it’s implications, unless in the circumstances it would not be fair to hold parties to the agreement.
Where a Pre-Nuptial Agreement has been drafted in the correct circumstances, it provides parties with clarity going forward. Ideally, it will reduce the risk of costly litigation at a later date.
Co-habitation Agreements
Couples not planning to marry, but embarking upon a cohabiting relationship, may wish to enter into a Cohabitation Agreement to set out their interests and intentions in the event of a relationship breakdown. This can be used to record understandings and intentions, e.g. if one party contributes more to the purchase price of the home, and/ or if one party is repaying the mortgage on a property owned in the other’s sole name.
Again, this can assist in providing certainty from the outset rather than the parties having to endure the heartache and costs of a dispute associated with trying to retrospectively “unpick” the arrangements and decipher intentions several or many years later.
During a relationship
Post-nuptial Agreements do not seem to receive as much publicity and debate as Pre-Nups.
It is often hard to envisage why or how a couple in a happy, committed marriage might begin to embark upon a discussion about what should happen if things go wrong.
However, couples are increasingly going down the route of entering into Post-Nuptial Agreements to provide them with clarity and certainty if the relationship breaks down. This could be because, once married, there is no scope for argument that the agreement was used as a device to ensure that the marriage proceeded (as with a Pre-Nup). Post Nuptial Agreements would, by definition, be less time sensitive and the parties would arguably be under less pressure.
Post Nups are also regarded as a tool for financial planning after a marriage – sometimes several months or years post- marriage. This could be where the relationship has encountered “rocky” patches or simply because of family dynamics, changes in circumstances and/ or the need to protect family wealth.
Parties can agree a framework for the division in the event of a Divorce. This can include formulas to allow for different circumstances which may arise, e.g. with provision increasing in tandem with the duration of the marriage, upon the birth of children, etc. It is also possible to provide advance assurance to the parties that they will each agree to maintain confidentiality regarding their affairs.
It is often said that it is “unromantic” for parties to consider these things when, at the same time, committing to live together or planning their wedding. However, couples are increasingly acknowledging the benefit of being transparent with one another regarding their finances (both individual and joint) so that expectations can be managed from the outset and misunderstandings avoided.
Pre and Post Nuptial agreements can be adapted to reflect specific features of a couples’ financial arrangements, plans and requirements. Furthermore, they can cater for potential circumstances and can also be used to spell out Child Arrangements.
Upon a relationship breakdown
Separation Agreements are often used where parties are opposed to a Divorce, perhaps for religious reasons. Prior to the availability of the ‘no fault Divorce’ in April 2022, Separation Agreements were used in situations where parties were hoping to preserve any understandings and financial agreements during the 2 or 5 year periods of separation required before a Divorce could proceed upon without any allegation of fault (i.e. adultery or unreasonable behaviour). Now that parties no longer need to give reasons as a basis for their Divorce application, this does not arise so frequently.
Although, the 20 week ‘holding’ period between the date of application and the application for Conditional Order under the new Divorce Law could result is situations where couples have agreed their financial terms of settlement at a very early point and wish to document and implement this before the 20 week period has elapsed , for example if they have found a buyer for their property, or there is an urgent need for the release of funds, etc.
The Court cannot approve a Financial Consent Order until the Conditional Order of Divorce has been made. Therefore, this could mean a delay of at least 20 weeks.
A Separation Agreement may be a short term mechanism to enable such parties to document and preserve the agreement reached until such time as it can be approved by the Court within the Divorce process after the Conditional Order is made.
They cannot however be used to implement certain aspects of a financial settlement e.g. Pension Sharing – which requires a Court Order.
Signposting – identifying potential client needs for Family Law Agreements
- Couples about to live together and/ or get married:-
- Perhaps cohabiting in a property owned (and funded) solely by one party for many years prior to the relationship/ marriage;
- Perhaps to ensure sharing of any jointly acquired assets but protect pre-owned assets in their sole names, particularly those which are never “mingled” or matrimonialised;
- Perhaps involving a gift or “early inheritance” from one party’s family towards the acquisition of their home which it is agreed should be ringfenced; and
- Perhaps to protect wider Family assets and estates from claims upon Divorce.
- Couples already living together and/ or married who need to consider future financial planning;
- Those looking to ensure children from current relationships do not “miss out” where their partner/ spouse has children from other relationships;
- Those looking to protect with business interests and / or wider family wealth;
- Those embarking upon a Separation – particularly those who are wholly opposed to a Divorce.
By definition, these Agreements would have to be documented to reflect terms agreed between the parties. This can be terms agreed directly between the parties, following a negotiation through solicitors or via Mediation. There is no way to compel a party to enter into such an Agreement.
Considerations – Family Law Agreements
There are certain points to note with regard to the enforceability of both Pre and Post Nuptial, Cohabitation and Separation Agreements. All clients would require detailed and specific advice tailored to their individual needs, but here follows a summary of the legal status of Nuptial Agreements.
In the event of a marriage breakdown and the issue of Divorce proceedings by one or both parties, their financial claims against one another would be activated under the 3 main headings – namely income, capital, and pensions. Those claims can only be resolved either (i) by agreement between the parties which is then approved by the Court or (ii) upon the Court determining the appropriate financial outcome.
No agreement between parties can override the Court’s jurisdiction to decide on the appropriate division of assets on a Divorce, which means that neither a Pre or Post Nuptial Agreement can stop one party applying to the Court for financial provision from the other.
Any Pre or Post Nuptial Agreement should include reasonable provision for both parties and generally include a review clause to ensure consideration could be given to the provision within the agreement in the event of a change of circumstances. The birth of children (or more children) would be a common example.
- If there is an agreement between the parties at the time of the Divorce (which may still reflect the terms of a Post Nuptial Agreement), a ‘Consent Order’ would be drawn to reflect the terms and the Court would be asked to approve this at the appropriate stage of the Divorce process. Usually, the Court will approve a Consent Order where both parties have had the benefit of independent legal advice and where the settlement terms do not appear manifestly unfair and make reasonable provision for both parties’ needs.
- If there is no financial agreement (for example, if there is no Pre or Post Nuptial Agreement or if one party subsequently disputes the validity or relevance of such an Agreement), then the Court would determine the appropriate outcome during a Court process involving full disclosure of assets, ongoing efforts at negotiation and a sequence of Court Hearings before the Court ultimately makes the final decision regarding the appropriate financial outcome for you both. The Court would look at a range of factors when making this determination and the Court can be asked to make a determination regarding the validity and relevance of a Pre or Post Nuptial Agreement.
There are never any guarantees that the Court would follow the terms in a Pre or Post Nuptial Agreement in making their determination. The Court would look at the circumstances in which the Agreement was prepared and signed, and the terms provided for by the Agreement. Generally speaking, the document would have little to no validity if there had not been an exchange of full and frank disclosure between the parties before it was executed AND if both parties had not received (or at least been robustly advised to obtain) independent legal advice.
The Court would also examine the circumstances in which the Agreement was signed i.e. how close to the marriage date. Iin the case of a Pre-Nuptial agreement, whether there was any pressure or coercion for one party to sign the document, etc? It is always borne in mind that an Agreement signed several (or many) years before the marriage breakdown, might not accurately reflect the parties’ intentions or a fair outcome now.
The Court would balance the need to consider the unfairness of not upholding an Agreement that had been relied upon, with the need to consider whether the terms within the Agreement represent a fair outcome at the time of the marriage breakdown and adequately meet the parties’ needs going forward.
All parties considering entering into such an Agreement should have regard to the following basic considerations:-
- The Agreement can only be entered into if both parties are willing and able to proceed;
- There would need to be an exchange of full financial disclosure before the terms of the Agreement are negotiated and agreed;
- The parties would both require independent legal advice with regard to the financial situation and the proposed terms, but also the nature and effect of the Agreement;
- Until such time as there is full financial disclosure (and potentially an independent valuation of any assets) from both parties to provide a clearer picture of the financial situation, it would be difficult for any legal representative to advise either party regarding the appropriate terms and/ or the likely costs of finalising a Pre or the Post Nuptial Agreement;
- It may well be the case that parties’ respective legal representatives will advise that the proposed terms of the Pre or Post Nuptial Agreement do not reflect the level of award that they might achieve if the Court were to determine the appropriate outcome if their marriage were to break down;
- For the reasons noted above, the parties would need to bear in mind that the terms documented in a Pre or Post Nuptial Agreement would not necessarily be 100% binding upon the Court in the event of a subsequent dispute if they were to subsequently Divorce;
- If either or both parties have any assets overseas, it would also be prudent to take advice in those countries, or at least from lawyers specialising in those jurisdictions, as to the need to enter into ‘mirror’ agreements. Ideally this would be achieved round the same time The lawyers in different jurisdictions will need to liaise with one another;
- There would be a need to keep the terms of the Pre or Post Nuptial Agreement under review even after it is executed. This is because circumstances change over time and the terms agreed now might not be appropriate in years to come;
- The arrangements proposed may necessitate the need for further, specialist advice e.g. tax, inheritance, etc; and
- The parties would also need to consider making a Will , or updating any existing Will, both to appoint Guardians for their Children and to confirm their intentions for their estates in the event of their death.
Any party considering the above options will need specific legal advice based upon their personal circumstances. Please contact Colette Blackburn, Senior Associate in our Family Law department for further assistance: colette.blackburn@dtmlegal.com or 0151 304 7145
