Family solicitor, Alan Stanley from Rawlins Davy Reeves explains separation agreements by way of answers to the most frequently asked questions.
What is a separation agreement?
Any couple, whether married / in a civil partnership or not, can enter into a written agreement setting out what they intend to happen to their money, property and other practical issues as a consequence of their current or planned separation. This agreement is called a separation agreement
I am married/in a civil partnership. Why do I need a separation agreement?
A properly executed and fair separation agreement will allow you and your ex-spouse/civil partner to divide the matrimonial assets within weeks of separation. You can then move on with reasonable confidence that any eventual Court settlement is likely to reflect the terms of the agreement. Even if one party were to change their mind and seek a larger settlement, the Court is likely to follow the terms of a well drafted and fair separation agreement provided there have been no significant changes in circumstances.
Court proceedings to decide the split of the matrimonial assets, on the other hand, are likely to take between 8 months and 1 year, even if you and your ex are in agreement. This is due in part to the 6 month ‘cooling off’ period built in to the ‘no fault divorce’ legislation (which came into force in April 2022); and in part due to the fact that the Court is currently experiencing a very high case load which in turn is causing delays. During this time many couples find themselves ‘in limbo’, unable to sell the family home or divide the other assets until the financial arrangements are approved by the Court. In some cases, this means that neither party can afford to move out of the family home until many months after separation when a financial Order is finally granted, a situation which can be far from ideal.
Even if you and your spouse/civil partner agree on how to split the matrimonial assets at the point you separate, either party is free to subsequently apply to the Court for a larger settlement up until the point the arrangements are approved by Court Order. Many couples begin their separation journey amicably, however this often changes – especially if either of you begins a new relationship or comes under pressure from friends/family members to ‘fight’ for a better settlement. A well drafted separation agreement will provide a level of security that even if one party were to attempt to go back on the agreement, the Court is likely to follow it provided certain conditions are met.
To delay / avoid divorce proceedings
Some couples wish to live separate lives while remaining married. Some of the reasons are that perhaps there is hope that there may be a reconciliation, or that one of you has a ‘death in service’ or pension benefit payable to a spouse that would be lost on divorce, perhaps there are religious reasons why you would rather not divorce, or simply that you do not wish to rush into divorce proceedings. Whatever the reason, a separation agreement will allow you to move on with a reasonable level of confidence that the agreed division of the assets will be reflected in any financial settlement obtained in Court when the time comes to divorce. It should be noted however, that one of the reasons the Court may depart from the terms of a separation agreement is a change in circumstances affecting the fairness of the agreement. The more time that passes from making a separation agreement, the greater the likelihood that such a change will occur. This may include one of the parties bearing a child, change or loss of job, coming in to a substantial amount of money etc. If you plan to utilise a separation agreement as a long term solution to the division of your assets, we would advise that you update it at regular intervals of around 2 years.
I am not married / in a civil partnership but do jointly own property with my partner. Why do I need a separation agreement?
If you jointly own property and split up with your partner, a separation agreement can define who is to take conduct of the sale of the property, when the property is to be placed on the market for sale, how the parties will agree a sale price (and what happens if the sale price cannot be agreed) and how the proceeds are to be split. This is important if one of you has paid more of the initial deposit than the other, for example, and it is agreed that this party will have a larger share of the sale proceeds in recognition. A separation agreement can also provide that one of the parties has the option to ‘buy out’ the other, and define the conditions and timescale under which this is to occur.
A typical situation in which a separation agreement may prove beneficial is when a couple purchase a property with a fixed term mortgage which carries a substantial penalty for early redemption. In this case, if the couple separate before the end of the fixed term it may be agreed that one party will remain in the property until the redemption penalty expires, thereby saving both parties sometimes several thousand pounds. The separation agreement would usually stipulate that the person residing in the property would be liable for the mortgage and household bills in the interim and go on to define the date at which the property is to be put on the market.
The separation agreement can also provide for details such as who owns specific household items or pets, and who is liable for the repayment of joint name debt or how the funds in a joint name bank account are to be split.
Is a separation agreement legally enforceable?
The short answer is ‘probably’, provided it is well drafted and fair. How you would go about enforcing a separation agreement depends on whether you are married / in a civil partnership, or not.
If you are married / in a civil partnership
The most straightforward route to enforcing a separation agreement if you are married or in a civil partnership is to ask the Court to grant a Court Order in the terms of the separation agreement on divorce. The Court is likely to do this, provided the agreement is properly executed and fair. If the Court agrees, the Order will be enforceable.
If you wish to avoid or delay divorce proceedings, you can ask the Court to enforce the agreement under the laws of contract. Provided the Court finds that the agreement meets the criteria of a properly formed contract, the terms should be upheld. However, the Court’s power to interfere in property rights between married / civil partnered couples is restricted. If you seek to enforce a provision involving property, financial proceedings may provide the greater prospect of success.
If you are not married / in a civil partnership
For disputes involving property (land and buildings), it will be necessary to ask the Court to (a) define each party’s share of the property and (b) Order that the property is sold and the proceeds split accordingly. A separation agreement will provide evidence to the Court of your joint intentions regarding the disposal of jointly held property and will form a significant factor in the Court’s consideration.
A note on jointly held property: while a separation agreement can define how property is to be split on break up, a better solution would be to define the extent of each party’s share, and what happens if the couple split up, at the point of purchase rather than separation. This can be achieved by drawing up and executing a declaration of trust to be included in the conveyancing transaction which can be relied upon if necessary in later proceedings. A properly executed record of your intentions on purchase is likely to be the deciding factor in any dispute over the disposal of the property at a later date.
For disputes which don’t involve property, the laws of contract will apply. The Court should Order that the terms of the separation agreement are followed provided the agreement itself meets the criteria of a valid and enforceable contract.
What does ‘fair’ mean?
Current case law and Court guidance is that separation agreements (in fact, any pre or post nuptial agreements) should be upheld provided they are ‘fair’. It is for the Court to determine if the agreement is fair, taking into account the following criteria:
- Did both parties have legal advice before entering into it.
- Was there full financial disclosure, interpreted as sufficient information to make an informed decision on whether to enter into the agreement and an understanding of its implications.
- Whether the terms of the agreement are substantially fair, i.e. does the agreement provide for the needs of the parties in the event of divorce
- Whether the agreement will provide for the needs of any child of the relationship.
- That neither party felt pressurised into entering the agreement, i.e. there was no undue influence or duress
- That there was no fraud or misrepresentation by either party in relation to the agreement
- That the legal contractual requirements were followed when the agreement was entered into.
Current Court practice is informed in large part by a decision of the Supreme Court in 2010 in the case of Radmacher v Granatino, where the Court said: ‘The court should give effect to a nuptial agreement that is freely entered into by each party with a full appreciation of its implications unless in the circumstances prevailing it would not be fair to hold the parties to their agreement’.
What if one party changes their mind after entering into a separation agreement?
If one party were to change their mind and no longer wishes to be bound by the separation agreement, the party who wishes to enforce the separation agreement can make an application to the Court for the other to explain why and Order should not be made in the terms of the agreement (known as a ‘show cause’ application). Whether the Court will uphold the agreement depends on whether the agreement is ‘fair’ with regard to the factors above. It is for this reason that you should not enter into a separation agreement unless you intend to be bound by its terms.
Can child arrangements be included in a separation agreement
The short answer is ‘no’. While a separation agreement can express how you intend to care for children after separation, for example who the children should live with and who they should spend time with, the separation agreement is not binding. If children matters cannot be resolved between the parents, then it may be necessary to ask the Court to make a Child Arrangements Order. On doing so, the Court will consider the welfare of the child as of paramount importance, regardless of the wishes of the parents.
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