Natasha Kurth
- Partner
- Family & Divorce
Protecting family wealth across relationships
For families planning how to protect and pass on wealth, relationship breakdown is no longer a peripheral concern and must be considered as part of long‑term planning.
Marriage, cohabitation and joint property ownership each carry distinct legal and financial consequences, and it is vital to think carefully about these issues from the outset. Deliberate conversations and choices can help provide clarity, manage expectations and reduce uncertainty if circumstances change. By addressing these matters early, families can better safeguard assets intended for future generations, preserve control over how wealth is shared, and minimise the risk of unintended outcomes undermining legacy planning.
Pre‑nuptial agreements
A pre‑nuptial agreement is designed to regulate financial arrangements on divorce and is generally used to ringfence non‑matrimonial wealth, such as inherited assets, pre‑acquired businesses and trust interests. These agreements are becoming increasingly commonplace.
The key protection offered by a pre‑nuptial agreement is risk management – even a carefully drafted agreement cannot oust the court’s jurisdiction on divorce. However, pre-nuptial agreements can substantially influence the court’s approach on divorce and significantly narrow the scope for dispute.
Cohabitation agreements
ONS data shows a steady rise in cohabiting couples over the last decade. The number of cohabiting couple families in the UK increased from around 3.1 million in 2014 to 3.5 million in 2024, making cohabitation the fastest‑growing family type. Over the same period, the proportion of families made up of married couples has fallen, largely because more couples are choosing to live together without marrying.
Notwithstanding the above, there is no concept of “common law marriage”. Cohabitation remains one of the most misunderstood areas of English family law and few realise unmarried partners do not acquire automatic financial claims on separation, save for limited property claims and those made on behalf of a child.
A cohabitation agreement seeks to fill this gap. It enables couples to record how they will run their financial lives together, covering ownership of assets, responsibility for outgoings and what should happen if the relationship ends. These agreements are particularly valuable where one party is contributing more capital to a property purchase, funding a greater share of the outgoings, or where financial assistance is provided and/or expected from family members.
Unlike pre‑nuptial agreements, cohabitation agreements are usually enforced as ordinary contracts, provided contractual formalities and safeguards are observed.
Cohabitation agreements are often most effective when paired with complementary documents – declarations of trust for property, Wills to address financial provision on death, and pre‑nuptial agreements on later marriage, to ensure consistency as the legal framework changes.
Declarations of trust
A declaration of trust is fundamentally different in nature. It does not seek to regulate relationship breakdown directly, but rather to define beneficial ownership of property.
Declarations of trust are particularly valuable where contributions are unequal, for example, due to differing capital input or family loans. They can specify shares, confirm adjustment mechanisms, and set out procedures for selling or buying out co-owners.
A properly drafted declaration of trust will usually be determinative of ownership as a matter of property law. That said, its protective reach is limited. On divorce, the family court is not bound by a declaration of trust and may depart from it to achieve fairness. For unmarried couples, however, it can be decisive.
Importantly, declarations of trust are often misconceived as a standalone solution to relationship risk. However, they do not deal with other assets owned by the parties, or future acquisitions. For this reason, they work best when prepared in parallel with a cohabitation agreement, particularly where parents or trustees are providing financial assistance to a couple.
Choosing the right tool
The question is rarely which document to use, but how to align them. For an unmarried couple buying property with unequal contributions, a declaration of trust combined with a cohabitation agreement will usually provide robust protection.
Where marriage is planned, that protection should be reinforced and carried forward into a pre‑nuptial agreement. These agreements are not a substitute for trust or estate planning, but they are an important complement to it, particularly for families seeking to protect dynastic wealth.
When aligned carefully, pre‑nuptial agreements, cohabitation agreements and declarations of trust can provide families with clarity of intention, a shared framework for decision‑making and strong evidential protection if relationships change. Whilst no document can eliminate uncertainty entirely, thoughtful planning significantly reduces risk and helps ensure that family wealth, values and long‑term objectives remain protected across generations.
If you would like any further information, please contact Natasha Kurth, or another member of our Family team.
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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