With This Pre-Nup, I Thee Wed; TWO BIG DIVORCE CASES AND NEW LAWS FOR COHABITING COUPLES ARE LIKELY TO SPARK A RUSH TO SIGN CONTRACTS
Byline: JO THORNHILL
Demand for prenuptial agreements and cohabitation contracts is set to soar after landmark divorce rulings and new legislation that will see improved rights for unmarried couples who break up.
Last month, two divorce cases hit the headlines after huge sums were awarded to the two ex-wives involved (see below). The decisions have major implications for future cases.
On top of that, draft legislation aims to give new financial rights to some two million cohabiting unmarried couples in England and Wales, meaning they could see assets, including pensions, split after a failed relationship.
Family law expert Elizabeth Hicks at national solicitors' firm Irwin Mitchell, says the cohabitation legislation is groundbreaking and good news for couples.
'Cohabiting couples without children have no single law to protect them and to ensure that they get a fair financial deal out of a relationship break-up,' says Hicks.
'The aim of this draft legislation, which is unlikely to become law until at least 2008, is designed to make things easier and fairer for couples who have shown commitment to each other but choose not to marry or enter into a civil partnership.' Under present law, if an unmarried couple separate and just one party owns the property, yet the other contributed either through mortgage repayments or paying for work on the home, they would have to take their partner to court to settle what proportion of the home's value they might be entitled to.
If there are disputes about the contents of the home, a separate case would have to be brought under different legislation to determine ownership. Such cases can be lengthy and costly.
Where children are involved, maintenance is arranged through the Child Support Agency, but a partner, usually the mother, can also claim top-up maintenance for the child through the courts if the estranged partner is wealthy.
Hicks says: 'There is no concept of common-law husband and wife in court, so though it is an unromantic idea, until the draft legislation becomes law, unmarried couples should ensure they are clear on where they stand financially should their relationship fail.' Hicks recommends that cohabiting couples put in place a contract or agreement as soon as they start living together, particularly if one half of the partnership has more money or owns a property.
If both parties seek legal advice and offer full disclosure of their assets, then the contract will usually be considered by a judge in court, though it will not be legally binding.
Once the cohabitation legislation comes into force in 2008, it is likely that couples will be able to draw up opt-out contracts. This means they will not fall under the new legislation and can decide between themselves what should happen to any property and assets.
A prenuptial contract or agreement can be drawn up before a marriage and sets out how the couple's assets will be divided should the relationship fail.
A prenuptial or cohabiting contract drawn up by a solicitor can be expensive, depending on the amount of money involved and the complexity of the finances. …