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What are Separation Agreements?

Friday, 25 October 2013

Separation agreements can be a useful way to bring some stability to what is often a very uncertain situation.

Catherine Zeta Jones and Michael Douglas recently decided to separate in order to “evaluate and work on their marriage.” It is believed that the couple have a pre-nuptial agreement in place in the event a divorce but many couples looking to take a marriage break may not have.

For those lacking the luxury of a Hollywood lifestyle and the accompanying bank balance, the financial and emotional uncertainty of the wait and see approach is probably unthinkable and impractical.

A separation agreement can provide a practical way to manage this kind of situation by taking account of different eventualities that could eventually arise, including divorce.

The Basics of a Separation Agreement

A separation agreement is a contract which is drawn up between a couple married or otherwise, detailing the arrangements they intend to make as a result of their decision to separate.

Separation agreements are particularly useful where significant assets exist as they allow a couple to formalise their financial affairs on an agreed basis.

They can be entered into by unmarried couples or by married couples that may wish to separate with the possibility of initiating divorce proceedings at a later date.

Limitations of Separation Agreements

Separation agreements are not court orders, so the court is not bound to follow the provisions in them should a conflict arise. However, recent case law indicates that the court will pay closer attention to them if the following conditions are met:

  1. The agreement must state that the couple intend it to be legally binding.

  2. The couple must give full and frank disclosure of their finances and supporting documents must be attached to, or referenced in the completed document.

  3. Both individuals must receive independent legal advice to ensure that they fully understand the nature and implications of the agreement and have entered into it freely.

Provided that these conditions are met at the time that the agreement is drafted, a court is likely to follow the provisions of the document, and stand by them should a conflict arise further down the line. In the recent case of T v T [2013], the High Court held that the agreement was valid, 22 years after it was created; as there was no evidence that either party had been pressured into the agreement or that it was unfair. It was held that later changes in circumstance had no bearing on a discharged agreement.

A Separation Agreement is Not a Divorce

If a couple is married, a separation agreement does not bar individuals from making claims in relation to property or pension rights, which must be addressed by court order.

The agreement is usually intended to cover a defined period of time and the terms will usually be included within any divorce rulings so that any burden upon the parties is discharged once the divorce is finalised.

While separation agreements can bridge a gap, they cannot and should not be viewed as an extension of the final divorce settlement.

If you think a separation agreement might be suitable for you and you need advice, please contact a member of the Family Law Department by telephone on 0207 611 4848.