Each agreement type requires careful consideration and typically involves obtaining independent legal advice to ensure validity and enforceability. Whether couples are simply living together without formal legal ties or planning a future marriage or civil partnership, understanding the available options is essential. A well-drafted prenup or cohabitation agreement can establish clear expectations and protect both parties’ interests, particularly in relation to property, savings, joint assets, and investments.
What is a cohabitation agreement
A cohabitation agreement is a legal document designed for unmarried couples who choose to live together without entering into marriage or civil partnership. In England and Wales, there is no such thing as “common law” marriage, meaning that couples who cohabit have limited legal rights compared to married couples. This makes a cohabitation agreement particularly important for protecting both parties’ interests. The agreement typically covers financial arrangements including property ownership, household expenses, and what happens to assets if the relationship ends.
To maximise the chances of the agreement being recognised as legally binding, both parties must provide full financial disclosure before signing. This means revealing all assets, debts, and financial commitments. The parties must also have independent legal advice and the agreement must be entered into freely without coercion. Unlike married couples, unmarried couples cannot benefit from the financial protections available under the Matrimonial Causes Act 1973, making these agreements essential for clarity in the event of a separation.
The agreement should be carefully drafted to cover all aspects of the couple’s financial arrangements, including provisions for assets and liabilities, ongoing financial responsibilities, and arrangements for any children. Professional legal advice is crucial to ensure the agreement meets all legal requirements and adequately protects both parties’ interests when the relationship breaks down.
The advantages of using a cohabitation agreement include:
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Minimising the risk of a party acquiring unintended proprietary interests in the home, and specify how the home is to be dealt with upon separation (removal of assets, timelines,…).
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Detail what assets are owned by who, and clarify who will be the owner of future gifts made by parents (eg gifts from parents above £1,000 will be retained by the direct offspring of the relevant parent).
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Make provisions for how household costs and bank accounts are to be dealt with, and specify how custody of eventual children is intended to be shared.
A cohabitation agreement usually would categorise assets into three main baskets, and then determine how these are to be dealt with in the event of a separation. For example:
- Assets of Part 1.
- Assets of Part 2.
- Joint assets. For each of these:
- How much of it belongs to Party 1 (eg 70%).
- How much of it belongs to Party 2 (eg 30%).
Cohabitation agreement enforcement
The enforceability of cohabitation agreements depends on several factors, including whether the agreement is fair and whether both parties understand the implications of what they are signing. Courts will consider whether there was full financial disclosure and whether both parties had sufficient time to consider the agreement before signing. A valid agreement should be regularly reviewed, particularly when circumstances change significantly, such as the birth of children or major changes in financial circumstances.
What is a Prenup Agreement
A prenuptial agreement is a legal contract made between prospective spouses before they enter into marriage or civil partnership. These agreements, often referred to as prenups, are designed to establish how assets will be divided and financial matters handled in the event of a divorce or dissolution. While not automatically binding in the UK, prenuptial agreements can carry significant weight in court proceedings, particularly following the landmark case of Radmacher v Granatino, which established that such agreements should be given “decisive weight” unless the agreement is unfair.
For a prenuptial agreement to be considered by the courts, specific requirements must be met. Both parties must receive independent legal advice from qualified solicitors, and there must be full financial disclosure of all assets, debts, and financial commitments. The agreement should be signed at least 28 days before the marriage, allowing both parties adequate time to consider the implications.
A well-drafted pre-nuptial agreement can address various financial matters including the division of assets, spousal maintenance, and provisions for children. However, courts retain discretion to vary agreements that do not adequately provide for children’s welfare or that would leave one party in financial hardship. The agreement cannot override the court’s duty to ensure fair provision for children, and the family court will always prioritise children’s welfare when making decisions.
Prenuptial agreement
| Type | Features | Best For |
|---|---|---|
| Basic Prenup | Asset protection, simple financial arrangements | Couples with modest assets seeking basic protection |
| Comprehensive Prenup | Complex asset division, business interests, inheritance protection | High net worth individuals, business owners |
| International Prenup | Multi-jurisdictional considerations, foreign assets | Couples with international connections or assets |
The table above illustrates different types of marital agreements available to couples. Each type serves specific needs and circumstances, from basic asset protection to complex international arrangements. The choice depends on factors such as the couple’s financial situation, business interests, and future plans.
What is a Post-Nup Agreement
Post-nuptial agreements are contracts made between spouses after they have married or entered into civil partnership. These postnuptial agreements serve similar purposes to prenups but are created during the marriage rather than before it. They can be particularly useful when circumstances change significantly after marriage, such as one spouse inheriting substantial assets, starting a business, or when the couple wants to clarify their financial arrangements. Like prenups, postnuptial agreements require careful consideration and professional legal guidance to ensure they meet the necessary legal standards.
The requirements for a valid post-nup agreement are similar to those for prenups, including the need for both parties to receive separate legal advice and to make full financial disclosure. The agreement must be entered into freely without undue pressure or coercion from either party. Courts will scrutinise these agreements particularly carefully, as they are made during an existing marital relationship where there may be power imbalances or emotional pressures that could affect the fairness of the agreement. Accordingly, it is best to enter into a pre-nuptial agreement before marriage, instead of waiting for marriage to enter into a post-nup.
Postnuptial agreements can address many of the same issues as prenups, including protecting your assets, establishing financial responsibilities, and planning for potential separation. They may also include provisions for separation agreements that would take effect if the couple decides to separate. However, like all marital agreements, they cannot override the court’s responsibility to ensure adequate provision for children or prevent the court from making orders it considers necessary for fairness and welfare.
Independent legal advice for relationship agreements
Obtaining proper legal advice is crucial for all three types of agreements. Each party should have their own solicitor who can explain the rights and responsibilities involved and ensure the agreement is fair and enforceable. Professional advice helps ensure that all parties fully understand what they are agreeing to and that the agreement will provide the intended protection if circumstances change in the future.
Conclusion
Understanding the differences between a Cohabitation Agreement; Prenup Agreement; Post-nup agreement is essential for making informed decisions about your relationship and financial future. Each serves distinct purposes: cohabitation agreements protect unmarried couples who are living together, prenuptial agreements establish terms before marriage or civil partnership, and post-nuptial agreements address changing circumstances during marriage. All require careful consideration, full financial disclosure, and independent legal advice to ensure they provide adequate protection and meet legal requirements.
| When signed? | Legally binding? | |
| Cohabitation agreement | Before or whilst living together | Yes, but execute as a deed and meet the prenup and post-nup requirements to maximise the chances of the contract being enforced) |
| Prenup agreement | Before getting married, with the expectation of getting married soon. | Only if meet certain conditions, and subject to changes as the court deems fit |
| Post-nup agreement | After getting married. | Only if meet certain conditions, and subject to changes as the court deems fit |
The key to successful implementation of any of these agreements lies in proper preparation, honest communication, and professional guidance. Whether you need a cohabitation agreement to protect your interests as an unmarried couple, a comprehensive prenuptial agreement before your wedding, or a post-nuptial agreement to address changing circumstances, consulting with experienced family law specialists ensures your interests are properly protected. These agreements, when properly drafted and executed, can provide invaluable peace of mind and clarity for couples navigating their personal and financial relationships in England and Wales.