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Share Article: A Key to the Gates of an Amicable Divorce?

I recently asked a number of non-lawyer friends to name some words which spring to mind when thinking of ‘divorce’. I was not surprised at the words which occurred most frequently- ‘difficulty’, ‘arguments’ and ‘stress’. It is widely known and reported that the most stressful events in a person’s life include moving house, the death of a loved one, and going through a divorce.

As a Family Solicitor, and member of Resolution (an organisation committed to a constructive approach to Family disputes), I am strongly of the view that divorce does not need to be as ‘difficult’ and ‘stressful’ as it so frequently is.

When it was recently reported that the ‘fourth richest man in the world’ and co-founder of Microsoft, Bill Gates, and his wife, Melinda Gates, a philanthropist and former General Manager at Microsoft, were going through a divorce, it not only surprised people that their marriage was coming to end after 27 years, but that the parties seemed to have already reached an agreement as to the division of their finances. One would imagine years of court battles to divide an estimated net worth of $130 billion, particularly after allegations of infidelity!

However, it is reported that the parties entered into a Separation Agreement, a mechanism used to record an agreement reached between separating parties as to the division of their finances, without the intervention of the court. Such an agreement subsequently forms the basis upon which a court makes a legally binding Order, generally reflecting the terms of the agreement.

Despite being used by the Gates couple, a Separation Agreement is not limited to the very wealthy, and can be used by any couple, regardless of their financial circumstances. Within the jurisdiction of England and Wales, a Separation Agreement is generally used by couples who wish to record their agreement concerning their finances, who are not yet in a position to go through the divorce process, for a variety of reasons, including religious or practical reasons. The Separation Agreement enables parties to record their agreement for future reference, until such time they are in a position to deal with the financial matters more formally by way of Court Order. By recording their agreement at the earliest stage, may help to avoid arguments regarding the appropriate division of assets later down the line. Minimising such arguments inevitably means reduced legal costs, and more for the parties to divide between themselves.

A Separation Agreement is not the only type of agreement which can be used by parties to reduce acrimony when it comes to dealing with the financial matters, in the event of the breakdown of their marriage/ civil partnership. Whilst Separation Agreements are agreements entered into at the time of relationship breakdown, it is also possible to enter into agreements when things are going well, in order to protect assets, should the ‘worst case’ scenario occur and your relationship breaks down.

Pre-nuptial agreements (agreements entered into before marriage) and post-nuptial agreements (entered into after marriage) are other useful tools which can be used to protect one’s assets, and record what the parties deem to be a fair financial arrangement, should their marriage break down. There are also pre and post partnership agreements, for those who are entering into civil partnerships.

There is no standard agreement, as they are all drafted specifically to suit your financial needs. Contrary to popular belief, a nuptial agreement does not just state ‘I keep everything and you leave with nothing’. In fact, such an agreement is unlikely to be upheld in this jurisdiction. A lot of people are not aware that nuptial agreements are not actually legally enforceable in this jurisdiction. This means that whilst they may be persuasive in the event of a later divorce, the court is not required to uphold them and may make a Final Order on divorce which departs from the term of the agreement. Provided certain conditions are met, the court is likely to give weight to the agreement. The court will want to be satisfied that the agreement was entered into in good time before the marriage, neither party was put under pressure to sign it, both parties obtained independent legal advice, both parties gave full disclosure of their finances, and that the agreement is fair. One party walking away with all of the income and assets certainly would not be considered fair and is very unlikely to be upheld.

Agreements are not limited to those who are married/ in a civil partnership. Those who are in a cohabiting relationship can also record their intentions in respect of the division of finances in respect of a relationship breakdown in a Cohabitation Agreement. This can be very useful for couples who do not intend to get married, as there is no specific law which applies to cohabiting couples when they separate. Just to clarify another myth, there is no such thing as a ‘common law marriage’. Cohabitation agreements are therefore useful in setting out the financial arrangements during the course of the cohabiting relationship i.e. who shall pay the mortgage? Who shall pay what bills? Do bill contributions constitute a share of the equity of the home? Unlike in marriages, there is no provision for an equivalent of spousal maintenance for cohabitees, a presumption that the ‘family home’ is beneficially owned by both parties, a starting point of 50/50 division of assets, and you cannot apply for a share of your cohabitee’s pension. The law may change in future to provide protection for cohabitees. However, as it currently stands, it is important to set out the financial arrangements available to you, as clearly and as early as possible in a written agreement, for the avoidance of future disputes.

The laws surrounding the breakdown of marriages/ civil partnerships and cohabitant relationships differ significantly, and it is imperative that legal advice is obtained at the earliest opportunity, regarding the appropriate agreement to enter into, the contents of that agreement, and the procedure regarding entering into it. As mentioned above, in the case of nuptial agreements, obtaining independent legal advice is necessary in order to give the agreement as much weight as possible.

Should you require legal advice concerning any of the above issues, please get in touch with our specialist Family Finance team on 020 7935 3522.This blog post was written by Angela Kwokori, a solicitor in our Family Finance team.

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