The value and flexibility of prenuptial and cohabitation agreements are not always appreciated. But they’re a great way to set out what you really, really want…
Many people who marry don’t know that a prenup would work well for them. And most people who buy a home together (without being married) don’t know they need a cohabitation agreement.
This is understandable. It’s hard to grasp what a prenup or cohab agreement could do for you unless you know the legal rules about what happens if you split up. Most people don’t know this until the rules bite them.
Prenups and cohabs would be more compelling, and also even more useful, if people realised how flexible they are (compared to the relatively rigid rules that apply when you don’t have them). The answer to the question “What can you put in these agreements?” is simple: “Pretty much anything, including the kitchen sink!”
What’s in a prenup?
In essence, a prenup sets out which of your assets will or won’t be counted as matrimonial property if you divorce. For example, ordinarily, the matrimonial pot would include:
- Any assets you acquired during the marriage.
- Your family home and furniture – even if you bought it pre-marriage and one partner paid for it.
- Gifts from your spouse during the marriage – including jewellery, cars, investments.
- If you owned a business, property or assets before your wedding, they would usually be excluded. But if you sold them after marrying and spent the money on something else, that new asset could be part of the matrimonial pot, as could investments you added to after the marriage.
- Another grey area is where one spouse’s existing business grows significantly during the marriage.
If any of these points ring alarm bells for you, be assured that a prenup could exclude them from the matrimonial pot – along with other assets we haven’t mentioned.
What’s in a cohab?
The situation with cohabitation agreements is different in that cohabiting partners have fewer rights than spouses. But cohabs also look more compelling if you understand what you could lose in a split.
One classic example should help here: where you pay all or most of the deposit (or total price) when buying property with your partner. If you split and sell up, you won’t have any automatic right to get that money back. Nor will you have any remedy in law allowing ownership of the property to be transferred to you.
Fortunately, these and many other points can be covered off in a cohab.
Anything you want them to be
The common point with these different scenarios is that prenups and cohabs allow you to protect assets or rights that you care about. All you need is:
- An agreement that is fair and reasonable at the time you make it – for example, no one is put under any pressure to sign.
- A lawyer who understands the possibilities and how to execute them effectively.
Nina Taylor Partner, Family Law
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