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My partner of four years and I recently decided to buy our first flat together. His family are fairly wealthy and as a result, he has asked us to develop a “no-nup” agreement together? What does this cover? How does it differ to a pre-nup agreement?
Sarah Higgins, partner at Charles Russell, says a “no-nup” is so-called because it refers to couples who do not intend to marry and so will not use prenuptial agreements.
If your partner’s family is wealthy, and he has suggested a “no-nup”, I assume this is because they are putting money into the flat which they want to protect. It needs to be clear from the start whether the money is a gift or a loan to your partner or to both of you.
If you and/or your partner are putting capital into the property, you need to decide how your interests are to be valued and recorded. You should ensure the legal title is in joint names with a trust deed setting out your interests. Other things to consider are how you value your interests and consider negative equity and how payment of the mortgage affects your interests in the property. You should also consider any payment for improvements. For example, if you pay for a loft conversion, how does your interest in the property increase? Finally, you will need to work out the mechanics for buying the other out.
The written contracts of a no-nup are designed to ensure assets brought into a relationship remain under an individual’s control if the two partners decide to go their separate ways.
It is similar to a prenuptial agreement, in that it sets out what would happen to the property if the couple parted, but the trust deed of a no-nup is essentially binding. You can have a cohabitation agreement covering other aspects of your finances, and you should both have a will.
If you are likely to become financially dependent on your partner, for example by giving up your job, one option would be to marry, but if this is not something you want to do, you should have an agreement as to how you will be compensated if you split up.
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