HCR Law Events

14 February 2023

Valentine’s Day and Wealth Protection

With Valentine’s Day here, and the Welsh equivalent of Dydd Santes Dwynwen having recently passed on the 25th January (we always like to do things slightly differently in Wales!), many couples are beginning to think about how they can express their love and commitment for their significant other and potentially, how they may advance their relationship to the next level. This may involve taking the decision to live together for the first time, to buy a property together or even to propose marriage.

It’s at this juncture that one often reflects back to the iconic scene in the hit BBC comedy show, Gavin and Stacey, whereby Gavin impulsively buys an engagement ring for Stacey at Paddington Station and goes down on one knee to propose as she is boarding her train to go back to Barry, after a whirlwind romance.

From a legal perspective, whilst no one enters into a relationship or a marriage expecting to separate, it is a timely reminder that as personal relationships develop, it is considered wise and prudent to have one eye on the future with financial planning and wealth protection in mind.

Therefore, from a family lawyers’ viewpoint, our clients and potential future clients need advice on what practical steps can be taken to protect their wealth and assets, just in case things do not go according to plan.

There are a number of ways in which individuals, and indeed couples, can adequately protect their wealth and minimise the scope for disputes later on. Some of the options available are covered below.

A cohabitation agreement

A Cohabitation agreement is a legal document and contract that is drawn up between unmarried couples that are living together or intend to live together. The agreement sets out the specific living arrangements between the parties. This can include, but is not limited to, each party’s respective contributions towards joint outgoings such as the mortgage or rent, utility bills and food or other supplies.

The agreement can also offer some certainty as to the mechanics of what may happen in the future should the relationship break down and the parties opt to no longer live together. For example – when one party should leave a property and how any personal items and contents should be divided.

Crucially a cohabitation agreement can also protect property which is legally owned by one party by expressly stating and ensuring that the non-owning party does not acquire a “beneficial interest” in the property by virtue of their contributions over time.

Declaration of trust

A Declaration of Trust is a legal document which sets out the terms upon which an asset, such as a property, is to be held on “trust” between the parties and how the respective “shares” in that asset are to be expressed and defined.

For example – person “A” is buying a property in joint names with person “B”. However, person “A” – or as is often the case, a member of their family – is financially contributing more into the property acquisition at the outset. This could include paying the deposit, stamp duty or legal fees. A Declaration of Trust can protect and ringfence these unmatched financial contributions so that they are credited to the party who provided them at the outset.

Essentially, a Declaration of Trust provide the parties with clarity and certainty as to their respective shares in an asset or property which could eliminate future disputes.

Pre-nuptial agreement

A pre-nuptial agreement is a legal agreement and contract entered into by a couple prior to their marriage, which regulates the ownership of their respective assets, pensions, debts and income should the marriage break down at a later date.

Interestingly, a pre-nuptial agreement can often be useful when one party is seeking to protect a future interest in an asset which has not yet crystallised such as an interest in a family business, some land, or inherited wealth.

The terms of a pre-nuptial agreement can also be reviewed and updated via a review clause which is incorporated into the agreement so that the parties can reflect and adapt to the evolving nature of family life. For example – changes in health, the birth of any children, retirement plans and more.

While not automatically legally binding, the courts in England and Wales are likely to uphold the terms set out within a pre-nuptial agreement, provided certain key conditions are met. These are:

  • The agreement is entered into by both parties freely and in the absence of any duress or coercion.
  • There is accurate financial disclosure from both parties
  • Both parties must understand the implications of the agreement that they are entering into
  • The agreement must be fair and take into consideration the future needs of both parties, to include any dependent children
  • The agreement is executed at least 28 days prior to the wedding
  • Both parties must have taken independent legal advice prior to entering into the agreement.


Having a cohabitation agreement, a Declaration of Trust or a pre-nuptial agreement prepared by a family lawyer could quite conceivably be compared to taking out an insurance policy.

It’s effectively a risk management plan aimed at protecting an individual’s wealth should the unthinkable happen and a relationship breaks down. While it is not considered romantic, it is practical and prudent and certainly in the long term, it could be the best and most cost effective financial planning available.

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About the Author
Richard Scott, Partner, Head of Family, Cardiff

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Richard Scott is a Cardiff solicitor, specialising in family law.

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