Preparing for the unexpected with your family law solicitor

They say prevention is better than cure and in the world of family law, no truer words were spoken…

Whilst many people perceive the role of family solicitors to be focused on resolving issues when things go wrong, particularly surrounding the breakdown of a relationship and division of assets, it is far more advantageous to seek the advice of a family solicitor when planning for the future and preparing for change.

Here we discuss three ways in which you can plan for the future, and protect yourself and your loved ones in the event of a relationship breakdown.

Implementing a Cohabitation Agreement

In 2023, cohabiting couple families accounted for 18% of all families in the UK; a figure which demonstrates a sustained growing trend.  However, it is worrying to note that many of these couples do not know their legal rights and entitlements.

Couples who live together but who are not married or in a civil partnership do not benefit from automatic pension rights, automatic rights to assets or inheritance rights (under the law of intestacy rules) in the same way as those who are married or in a civil partnership do. However, it is possible to address some of these issues with the introduction of a cohabitation agreement and with effective estate planning.  For example, where a couple have cohabited for say ten years, but their ‘home’ is held in the name of only one party, then the other has no automatic right to half the property upon separation,  and subject to what the mortgage arrangements were, may have no legal interest at all. There is no such thing as a ‘common law’ spouse.

If you are considering moving in with a partner or have in fact recently moved into a property, it is recommended that you consult a family solicitor in order to protect yourself, your investment and your future.

Whilst implementing an agreement which outlines who owns what assets and what would happen to these in the event of a relationship breakdown may not seem like the most romantic of gestures, taking practical steps during the course of a relationship  can prevent a great deal of animosity, costly negotiations and even heartbreak when one party, or the other realises that they have no claim to particular items. In addition to financial matters, a cohabitation agreement can also specify arrangements in relation to the maintenance or care of children, joint finance, property and other significant assets.

Whilst many couples may not wish to consider a time when they are no longer together, having the ‘difficult’ conversations and setting out arrangements now can prevent arguments and potentially costly legal battles at a later stage, particularly where children or property are involved.

Protecting Investment from The Bank of Mum and Dad

In addition to protecting our own investment in a relationship, it is vital to also protect those who provide a financial investment on our behalf…

The ‘Bank of Mum and Dad’, which encompasses parents, grandparents, relatives and even friends has become an increasingly popular source of funding in property purchases, and often provides that all important first step onto the property ladder. In fact, in 2023, over 50% of house purchases by those under the age of 35 were funded by the Bank of Mum and Dad, with first time buyers borrowing an average of £24,000.

For many of those lending and borrowing money however, discussions regarding the financing of deposits, mortgage payments or stamp duty are seen as ‘difficult conversations’ and therefore all too often do not happen. It is almost easier to believe in the ‘happily ever after’ scenario, which sadly on many occasions falls far from the reality. However, given that this finance is often raised from pension pots, property re-mortgages, equity release or even inheritance, it is vital that due consideration is given to how to protect it.

Prior to any money changing hands, agreements should be made and formally documented regarding the finance being provided, whether it is being provided as a loan or gift, repayment terms where appropriate and any specific terms and conditions. Where money is being provided as a loan, a loan agreement should be signed by all parties. The ‘lender’ can also register their ‘loan’ as an interest in the property, either by registering a second charge on the property or a restriction on title at the Land Registry. It is also possible for clauses to be added to agreements which specify that the finance provided is returned to the lender from proceeds of sale, in the event that the property is sold.

Unfortunately, we all too often see parents / family members seeking legal advice after they have provided finance for property purchases and sadly the relationship has broken down. This is often a more time consuming, costly and challenging process for all involved.

Protecting Assets in Marriage or Civil Partnership with a Pre-nuptial Agreement

The third way in which couples should consider protecting themselves and their financial assets is through a pre-nuptial agreement prior to marriage. Whilst prenuptial agreements are something that many of us may consider to be for the ‘rich and famous’, this is not necessarily the case.

Prenuptial agreements are recognised legal tools used by many couples to protect their assets including money, property, etc that are brought into a marriage, particularly second or subsequent marriages. Whilst not currently automatically legally binding in England and Wales, they do provide a detailed outline of the intentions of the couple entering the marriage or civil partnership and therefore, provided that set criteria are met in entering the agreement, they are considered by family courts to be binding.

Whilst pre-nuptial agreements aren’t suitable for all couples, they are useful legal tools to consider, particularly for those who have children / grandchildren from a previous marriage that they wish to ensure inherit their estate. If you are a business owner, if you have significant wealth or even in the event that your partner has significant debt that you wish to protect yourself from being liable for.

A prenuptial agreement can prevent a great deal of negotiation at a later date, particularly where there is an imbalance of assets and lifestyle upon entering the marriage.

Whilst we all have every hope and dream for a ‘happily ever after’ scenario when moving in with or indeed marrying a partner, it is recommended to seek advice in order to protect yourself, your partner and your family members in the event of a later breakdown in relationship. What may be a difficult conversation to have now could save you all a great deal of heartache later!