Separation agreements – an alternative to divorce
Relationships do not always pass the test of time, with the Office for National Statistics reporting that one in three marriages will end in divorce. The end of a marriage need not necessarily end in divorce, with many couples choosing instead a separation agreement. Bryan Scant explains.
Separation agreements are, in short, like a contract between a married couple or those in a civil partnership that sets out clearly the financial arrangements and responsibilities of each party. They remain valid until the couple divorces or until the relationship is restored.
There are many reasons why a couple may not wish to divorce immediately and choose a separation agreement, including religious reasons, family pressures and, particularly if parties have been separated for under two years, the court’s requirement to apportion blame.
Until government reforms divorce laws and allows for ‘no fault divorces’, the only option open to couples separated under two years is to apportioning blame where none may exist. This, understandably, leaves many couples in short marriages, who are separating without any real animosity, in an uncomfortable position.
A separation agreement will allow a couple to move on in their lives having agreed how their assets and financial responsibilities will be managed.
It will also make any future divorce considerably easier and cheaper.
Separation agreements can cover a wide range of matters, including:
- Who will pay the mortgage or rent, and household bills;
- Who will continue to live in the family home and what happens if it’s sold;
- What happens to any debts, such as loans or overdrafts;
- What happens to savings, investments and other financial assets;
- What happens to any items such as cars or furniture, especially if bought jointly; and
- Whether maintenance is paid to support a financially weaker spouse.
Whilst not technically legally binding, a court case in 2010, known as the Radmacher case, provided clarity and legal weight to what the courts call ‘nuptial agreements’, meaning that prenuptial, post-nuptial and separation agreements can influence a court’s decision on divorce settlements.
This means that couples wishing to create a separation agreement must do so without any undue influence from either party, and be prepared to disclose all of their combined and individual finances. Separation agreements must be fair and cannot leave one party in a financially disadvantaged position. This will mean that they will be quite detailed, addressing every financial aspect of the relationship.
Whilst it is entirely possible to create a separation agreement without the help of a solicitor, perhaps from a free to download form from the internet, it is not advisable. For a separation agreement to have any legal weight, it is vitally important that each party takes independent legal advice before signing the agreement.
If and when a couple eventually seeks a divorce, the courts will look to the fairness of the agreement and if they cannot demonstrate the fairness of the agreement, the courts can simply ignore it.
It is good practice to keep arrangements about the care and access to children outside of a separation agreement. The courts will always look to what is in the best interest and needs of any children from a relationship at that point in time and in future years. Separation agreements, by their very nature, focus on the financial position of a relationship at the point of time of separation and therefore may not adequately address the needs of any children. It is also good practice not to combine financial disputes with child arrangements as one should not influence the other.
There are some downsides to separation agreements that couples should understand before they decide whether they are the right option for them.
Separation agreements tend to be self-policed and work because the breakdown in the relationship is largely amicable. However, they can be difficult to enforce if one party decides not to abide by its terms, leaving divorce the only realistic option. An application to the court is necessary to begin financial remedy proceedings, which can be lengthy and costly.
They also do not offer the closure of a financial settlement approved by the courts that an order on divorce delivers. That will mean any such agreement will need to be revisited from time to time. And of course, individuals will remain married which may make future relationships difficult.
Separation agreements are increasingly popular, used not as a long-term alternative to a divorce, but as a stepping stone towards that final clean break without the animosity of a blame based divorce.