Couples and Families Forging New Relationships

Prenuptial agreements have found increasing popularity in recent years following a significant court decision that upheld a prenuptial agreement in the UK. They are now very much worth the paper they are written on.

A prenuptial agreement (or a postnuptial agreement) is an agreement made before (or after) a marriage. It is a formal written agreement entered into freely by both parties and sets out the circumstances of their current financial position at the outset of the marriage and also makes clear what financial provision would be made for both parties in the event of a divorce or death. The content of a prenuptial agreement can vary widely, but commonly includes provisions for the division of property should the couple divorce and any rights to spousal support during or after the dissolution of the marriage.

Prenuptial agreements are perhaps most common in situations where one person has substantial assets or earning capacity, or they own a business, and is marrying a person with significantly fewer assets. An agreement about future property settlement or spousal support payments can provide both parties with a degree of reassurance. Prenuptial agreements can also be useful for second marriages; in particular when a couple is older and both partners are financially established prior to entering the marriage. Financially independent people or people who have got significant retirement savings – and have children from a prior marriage – may want to establish a provision where all or a designated part of their assets and retirement funds remain separate. Certain assets, such as family heirlooms, can also be agreed to be outside the marital estate.

A prenuptial agreement can also cover assets which have not yet come into the marital estate, for example by clarifying how inheritances will be treated in the event of a divorce.

Debts, as well as assets, can be brought into a marriage. If there is no prenuptial agreement, creditors can sometimes turn to marital or shared assets to satisfy the debts of just one spouse. You can use a prenuptial agreement in order to limit your liability for each other’s debts.

Perhaps the most important ingredient of a solid prenuptial or postnuptial agreement is honesty. Both parties must fully disclose their assets. If it turns out either party has hidden something, a court can dismiss the agreement. A robust prenuptial agreement must also be signed well in advance of the wedding and there must be no indication of coercion.

For a postnuptial agreement it is important that the agreement is in place before any dispute, separation or divorce might take place.

A pre-civil partnership agreement is in effect the same as a prenuptial agreement. It sets out what each party’s financial circumstances are before the registration of the civil partnership and sets out what each party would like to happen in the event that the partnership is dissolved.

Section 73 of the Civil Partnership Act 2004 states that civil partnership agreements are not enforceable in the UK. They can, however, be extremely useful when it comes to determining financial and other arrangements, provided that:

• the agreement has been established in good time before the civil partnership itself (not the day before);
• each party has given full and frank disclosure of their financial circumstances; and
• independent legal advice has been obtained by each party.

Because civil partnerships are governed by the same laws as marriage, the likelihood is that any pre-partnership agreement will be treated in much the same way as a pre-nuptial agreement. The courts may, in the future, be more inclined to uphold any agreements made by civil partners, because a civil partnership is legally distinct from a marriage.

Couples living together who are not married or in a civil partnership have no special rights or duties in relation to each other, even if they have lived together for a number of years.

A cohabitation agreement or living together agreement is a legal agreement made between unmarried partners that sets out who owns what and in what proportion. It records how you will split your property, its contents, savings, personal belongings and any other assets in the event of the relationship breaking down.

It can set out how you will support any children in addition to any legal requirements It can also cover how you would deal with bank accounts, debts and joint purchases like a house or a car.

They are also used to set out how co-habiting couples will organise their day-to-day finances whilst they are together.

Each person takes out of the relationship the property which they have brought into the relationship. Money/assets acquired during the relationship generally belong to the person responsible for acquiring them and are only shared if there is a clear agreement or evidence of intention to do so.

Below are some of the elements you might consider when making a cohabitation agreement:

Banking arrangements

If a couple has a joint account then, if one dies, the other has full access to it. If you separate, however, then there is the risk that one partner cannot control the other one’s use of the funds or their partner runs up an overdraft on the account and they are liable for it.

If you have separate bank accounts and one of you dies then the money in the account becomes part of your deceased partner’s estate. As such it cannot be used until the estate is settled, even if the money is yours to inherit under your partner’s will.

Parental responsibilities

If you are living together and already have children then you are almost certain to have some sort of parental responsibility. This, however, is a complex area of law particularly where the children are the children of a same sex couple or where the birth has involved the use of surrogacy or IVF as there are a range of parental issues to consider.

A cohabitation agreement can be used to record each parties’ financial obligations and intentions towards any children in the event of the breakdown of the relationship.

Property

If you are the unmarried partner of a tenant and you live in a rental property you normally have no rights to stay in the property if the tenant asks you to leave. So it is usually preferable to have a suitable joint tenancy agreement in place.

The home is often the most valuable asset in a relationship. A couple should think carefully about whether they wish to purchase the home as ‘joint tenants’, as ‘tenants in common’ or in one party’s sole name. And they should consider the situation that would occur if they subsequently separate or one or the other of them dies.

For ‘joint tenants’ upon separation each person takes half of the equity in the home. If one dies, the survivor inherits the whole property.

For ‘tenants in common’ the property is held jointly, but this can be in equal or unequal shares. This can be helpful if one of or other of the couple is investing more in the property than the other. On death their share will not automatically pass to the other person. Where there are unequal contributions, it is sensible to set out the division of the equity in a Declaration of Trust agreement.

Where ownership of the family home is in the sole name of one person, it is prudent to set out the financial interest of the non-owner who otherwise may not be entitled to anything. The non-owner cannot claim a share of the property simply because they have been living there for a long time. If no such agreement is in place the non-owner will have to establish an interest in the property through financial contributions or other acceptable means.

Inheritance and death

If a partner dies without a will the surviving partner will not automatically inherit anything, apart from a property that is owned as beneficial joint tenants. Each partner should make a will if they want the other partner to inherit anything. If an unmarried partner inherits money or property then, unlike with a married couple, they will not be exempt from Inheritance Tax in the event that the estate value exceeds the inheritance tax threshold.

Next of kin

Unlike a married couple in the event of death, couples who are living together will not automatically be recognised as next of kin, for example by a hospital or an insurance company.

Occupational pension schemes often do not recognise partners who live together. They may only allow a pension to be paid to a surviving unmarried partner if the survivor was financially dependent on the pension scheme member. A specific nomination of the other partner may be required to ensure they will benefit from any personal or occupational policy.

As a result it is often prudent to make sure you have a suitable will in place to protect your co-habitee . And it is important to ensure you update your will if and when any circumstances change.

If you are contemplating entering into a civil partnership, we can help you understand the legal implications and work out if a civil partnership or a marriage will suit you best. You can protect your financial position by entering into a pre-registration agreement – similar to a prenuptial agreement – so that you already have an agreement in place if things don’t work out.

This is a highly complex and emotive area of the law. You may be in a marriage, a civil partnership, a same sex marriage or relationship or you may be a single person looking to have a family with the assistance of egg or sperm donors. You may be considering adoption or surrogacy. You may be a step-parent who wants to understand your responsibilities in a new relationship. As a potential parent you may find you have a donor who wants to play a role in the child’s life or you may want to limit the any donor’s involvement. (Equally as a donor you may want to ensure you have no subsequent parental liabilities).

The potential legal issues involved around the process of conceiving a child are considerable. It is well worth taking legal advice about your specific circumstances to ensure that you can secure your ideal family without encountering any unnecessary or unwanted legal complications and you can look forward to the joy of the birth of your child.

This is particularly pertinent for same sex couples or for couples who may be considering having a child by adoption, surrogacy or IVF methods.

Pre- and post-nuptial agreements, pre-civil arrangements, cohabitation agreements and more apply to same sex relationships as much as they do to heterosexual relationships. In addition, same sex couples need to be very aware of who are the legal, biological and psychological parents of their children and be clear about who has parental responsibility for their children.

For a birth mother in a marriage or civil partnership it is her civil partner or spouse who is the other legal parent and who shares parental responsibility. Where the birth mother is not in a civil partnership or marriage then the biological father is likely to be the other legal parent.

A gay couple may choose to have a child by adoption or by surrogacy. In such situations the intended parents need to ensure they apply for either an adoption order or a paternal order after the birth (and within six months of the birth) to ensure they become the child’s legal parents. The surrogate mother must agree to the order being made and understand the consequences of the order in that it transfers parental responsibility to the commissioning parents.

There are a number of options that can be taking to acquire parental responsibility of a child after their birth, depending on the circumstances involved:

• An adoption order
• A parental responsibility agreement
• A parental responsibility order
• A ‘live with’ child arrangements order

The manner in which a child is conceived in a same sex partnership has a significant impact on which parents are considered to have parental responsibility. Also just because someone is legally a parent doesn’t always mean they have parental responsibility in the eyes of the law. Someone who is not legally or biologically a parent can still be regarded as a psychological parent with parental responsibilities because of the way their relationship has developed; through feeding, nurturing and loving a child in their early life and the later more complex support provided by socialising, educating and protecting the child.

The focus of the courts is often placed on the child’s experience of being parented and the impact on the child’s wellbeing rather than a child’s biological or legal parentage.

For any couple thinking of starting a family we would advise them to consider taking advice on their situation and circumstances prior to conception.

At LCF Law we advise on all aspects of family law covering all the different situations that occur in relationships; whether a relationship is starting out, ongoing or in the prudent anticipation of what is required in the event that a relationship might subsequently break down.

We have extensive experience of all of the following areas of family and matrimonial law, helping you as you start your journey together or decide to start a family:

• Unmarried couples
• Cohabitation agreements
• Civil and same sex partnerships
• Prenuptial and postnuptial agreements

We also help when relationships and families break down:

• Separation and divorce
• Financial arrangements and settlements
• Child law and childcare arrangements
• Abusive relationships
• International family law

We have access to specialist accountants, valuers and many other experts and we work hard to ensure that everyone is working together to protect your interests as much as possible. We also have an extensive network of legal connections in other countries who we work closely with on the international aspects of any brief.

We advise on all types of relationship agreements – whether pre- or post- a formalising of the relationship by marriage or civil partnership – and we focus on how to make any such agreements as robust, relevant and practical as possible.

The law that relates to those who cohabit, as opposed to get married, is very different from matrimonial law. If you are thinking of moving in with your partner but are not getting married, we can advise you on how your property and assets can be impacted, particularly if your partner is moving into a house owned by you. If you are buying a property jointly with your unmarried partner it is vital that you both take individual legal advice, particularly if you are not contributing the same amount of deposit.

For potential or existing parents we can help you ensure that you and your children are properly protected whatever your circumstances may be, now or in the future, taking into account what might happen in the event of a relationship breakdown.

We believe it is important to be as open and upfront as possible about the likely charges and costs involved in all aspects of our relationship advisory work. Wherever possible we aim to offer fixed fees for various services or advice but this is not always possible due to the nature and complexity of a case – in which case we charge at an hourly rate. We will, however, always aim to give you a good indication of what we think may be involved based on our extensive experience and knowledge of your particular circumstances.