10 tips and traps

In my experience, private client professionals, including lawyers, accountants, wealth managers and bankers, are often interested in gaining a basic understanding of family law in England and Wales (English family law), so they are able to recognise when to refer their clients to a specialist family lawyer, which is not always as obvious as you might think. Many misconceptions and issues arise in this area of the law that, if not addressed, can have serious implications for clients.

1.The myth of the ‘common-law husband and wife’

There is still a thriving myth that in England and Wales people who live together without getting married eventually acquire the same or similar rights to a married couple. This is not the case and there is no such thing as a ‘common-law’ husband or wife. People who live together do not acquire the same legal status and rights as married couples, nor, indeed, do they gain any rights while they are both alive just by virtue of having been together.

There is a huge difference between how the law treats married and unmarried couples when they separate or divorce. Any claim is essentially limited by questions of legal and beneficial ownership of property, which is reliant on trust and land law principles. There will be claims for the benefit of children of the relationship and there may also be claims for support on the death of a financial provider.

However, there are protective measures that can be taken from the perspective of both the financially stronger party and the financially weaker party:

Cohabitation agreements

• A couple can enter a legally binding agreement to share their assets in a particular way and provide financial support in the event of a separation.
• This would give both parties some certainty, and the financially weaker party the security and stability of knowing they will not be left without any financial support if the relationship breaks down.

Property

• If the unmarried couple decide to buy property together, before doing so it is crucial that they decide, from the outset, the shares in which they will own the property.
• Without evidence to the contrary, there is a presumption that the property will be held in accordance with the legal title. It is then up to the other party to rely upon the law of trusts if they wish to claim a beneficial interest.

Wills

• The former cohabitant of the deceased has no automatic right to inherit anything under the rules of intestacy, even if there are children, so making a will can be vital. Even without a will, they may be able to make a claim against the estate of their deceased partner if the deceased was domiciled in England and Wales at the time of death, and the cohabitant was being wholly or partly maintained by the deceased at the time of the death.

2. Getting married? Think pre-nup

Prenuptial agreements (‘pre-nups’) are contracts before marriage stipulating how a couple’s assets should be divided on any future divorce.

Pre-nups are not legally binding under English family law. However, they can be taken into account and influence a financial settlement that is awarded on divorce, and in some cases are highly persuasive. The Supreme Court in the landmark case of Radmacher v Granatino [2010] UKSC 42 said that the English court should give effect to a nuptial agreement freely entered into by each party with a full appreciation of its implications, unless in the circumstances of the case it would not be fair to hold the parties to their agreement.

Where there is disparity between the parties’ current wealth or projected wealth (such as inheritance), a pre-nup may be seen as a necessity. If the couple have already married then they can enter into a postnuptial agreement.

3. Divorce

It is impossible to get divorced in the first year of the marriage. There is only one ground for divorce: the irretrievable breakdown of the marriage. This must be proven by relying on one of five facts, most commonly unreasonable behaviour or adultery.

The reason for the breakdown of the marriage almost never has an impact on the finances. Only gross and inequitable conduct by one party might have an effect, but this is rare, and is usually limited to financial misconduct.

4. International considerations

If the divorcing couple are foreign nationals, or either or both live abroad, then it is essential to consider the choice of jurisdiction. England, and more specifically London, has long been considered the ‘divorce capital of the world’, tending to award generous settlements to the financially weaker spouse. The financially stronger party may therefore want to consider whether it is possible to divorce in another country, if that option is available.

Speed is vital in cases involving another European Community (EC) country (except Denmark), as the EC country where family law proceedings are first issued will usually deal with the case, even if another country has a closer connection. Financial outcomes can differ dramatically across Europe, so this can have a major impact on the final settlement.

However, it must be remembered that Scotland is a different country. In Scotland there are restricted maintenance orders, a quasi-community of property regime, binding marriage agreements and no-fault divorce, so there could be a very different financial outcome if the divorce takes place north of the border.

5. Finances

The financial aspect of a divorce under English law is governed by the Matrimonial Causes Act 1973 (MCA).

Each case is decided on its own facts and the court considers factors listed in s25 MCA, which are summarised below. The first consideration is given to any minor children of the family.

• the income, earning capacity and other financial resources available to each party
• each party’s financial needs
• the standard of living enjoyed by the family before the breakdown of the marriage
• the ages of the parties and length of the marriage
• any physical or mental disabilities
• contributions made by both parties
• conduct; and
• the value of any benefit that either party will lose the chance of acquiring as a result of the divorce.

There is no automatic division of an equal share of the assets, and the court has wide discretion in making an order.

6. Freezing injunctions

If there is a suspicion that one spouse is trying to hide assets or dissipate them to defeat the claim, preventative measures can be taken. For example, one party’s assets can be frozen. This will often mean urgent action is needed to preserve those assets.

7. Inherited and premarital assets

If there are insufficient assets to meet both parties’ needs, then the fact that an asset has been brought into the marriage or inherited during the marriage by one party will carry little, if any, weight. However, in big-money cases the nature and source of the asset may be a good reason for departing from equality.

In relation to premarital assets, it is crucial to look closely at how the assets were accumulated. The general rule is that the more an asset has been intermingled with matrimonial assets, the more likely it is that the asset will be shared between the parties.

8. Trusts

Trusts will be taken into account if the court sees them as a resource now or in the foreseeable future. The courts will look at the reality of the situation, beyond the legal ownership of the trust structure.

It is important that, when a trust is being set up, advice from a family lawyer is sought so that the trustees can do what is possible to protect the trust in the event of a claim by a spouse on divorce. Of course, obtaining an order in relation to trust assets is one thing, but enforcing it may be a different story.

9. Children

It may be necessary to consider issues such as residence and contact, both with the non-resident parent and with the extended family.

Issues can also arise where one parent wishes to move abroad, often returning to their home country. If the other parent does not consent, then an application must be made to the court for permission. Where the parents share the child’s care, the decision will be based on whether such a move outside England and Wales is beneficial to the child’s welfare.

10. Alternative dispute resolution

There are many alternatives to going to court, including negotiation between solicitors, mediation, collaborative law and arbitration. A specialist family lawyer can advise which route is best suited to the client’s specific circumstances.