There has been a lot of talk in the press recently about ‘pre-nups’ and ‘no-nups’ that couples can sign to agree their finances, whether they are planning to get married or just live together. So if either are on the cards for you, I’ll explain how they work and the potential changes to the law that are on the horizon.
Introducing “no-nups” for cohabiting couples
According to figures from the Office for National Statistics there are currently around 3 million cohabiting couples in the UK, doubling between 1996 and 2012. With increasing numbers of couples choosing to live together before getting married, or who have no interest in getting married, the possibility of entering into a cohabitation agreement (also known as no-nups) is becoming a very popular option. No-nups basically set out your financial position – and that of your partner – before you decide to enter your new phase of life and start living together. Just as with pre-nups and post-nups, a cohabitation agreement clarifies how any assets such as property and savings – as well as any debts such as joint credit card bills – will be distributed and dealt with in the event that the relationship collapses. So if you’re thinking of moving in together but aren’t tying the knot, no-nups may be worth considering. They can provide that extra peace of mind and will often minimise any conflict which could arise at some future point, so it’s one less thing to worry about.
Pre-nups gaining in popularity
Although prenuptial agreements have traditionally been associated with the Hollywood glitterati and global jet setters, in recent years pre-nups have become increasingly common throughout the UK amongst people from all walks of life. They allow couples embarking upon marriage to set out their personal finances and decide in advance how money matters will be resolved if the relationship enters rocky waters. It’s not exactly romantic to think about what may happen if you split up, particularly if you’re planning for your big day, but planning for all the potential future eventualities can save a lot of headache in the long run. There are a few rules which should be followed to help ensure that your pre-nups are valid. In particular, it’s recommended that you complete and sign the agreement at least three weeks before your wedding and that you disclose all your money and property at the outset.
Making pre-nups watertight
To make pre-nups even more watertight, the Law Commission has proposed the introduction of “qualifying nuptial agreements”. These are essentially beefed-up pre-nups which would guarantee that what you agree with your partner will be upheld by the British courts. Explaining the reasons for the proposal, Professor Elizabeth Cooke, a member of the Law Commission with responsibility for Property, Family and Trust Law, said “Pre- and post-nuptial agreements are becoming more commonplace but the courts will not always follow them and lawyers are therefore not able to give clear advice about their effect. Qualifying nuptial agreements would give couples autonomy and control, and make the financial outcome of separation more predictable.” In the meantime, while the government decides whether to implement the proposals, the current system of pre-nups will continue to meet the needs of most couples.