Relationship contracts are becoming increasingly popular around the globe, with the strongest interest at the moment in Europe. They are becoming increasingly relevant to couples in the flushes of love around the forthcoming Valentine's Day.
People first started taking relationship contracts seriously when Facebook Founder Mark Zuckerberg and Priscilla Chan advocated this approach. They in fact went on to wed at an event in 2012 where guests apparently were told they were invited to a surprise graduation ceremony.
The advantage of a relationship contract is that for many it offers peace of mind and guarantees a non-divorce situation. It presents an amicable and easier way out of a relationship if it doesn't work as planned. If a relationship fails, it can be highly cost-effective because it is not a legally binding contract like marriage, where property and assets are automatically shared in the eyes of the law.
The advantage of a relationship contract, that is typically for five or ten years, is that the two individuals know where they stand. They can leave the relationship quickly and easily and not incur legal costs that would inevitably occur in the case of divorce.
Relationship contracts are favoured by high net worth individuals in particular because they are better able to protect their properties and investments. Unlike the case with marriage, assets are not automatically merged.
They are good for people who don't want to get married or who have already been married and experienced divorce and would prefer the benefit of freedom of a non-legally binding commitment.
It takes a certain confidence to raise the subject of a relationship contract and in itself demonstrates commitment in the person proposing the contract. It was reported that it was Priscilla Chan who wanted to know exactly what she was getting into when she was asked to relocate from Boston to Palo Alto by her partner, so she asked Zuckerberg to sign an agreement detailing expectations for their relationship and life together. In their case, the relationship contract paved the way to a successful marriage, so there is nothing to say that this formula will not work for others.
At Berkeley International we find that relationship contracts are most popular with over 45s and there is equal interest from men and women in initiating the agreements. For those with their own property, assets and very often children, the contract shows commitment without the drama and cost of a wedding and all that's involved. It allows people to feel protected from the risk of disappearing wealth.
It's important to note that a relationship contract can be renewed if both parties are happy at the end of the arrangement. This flexibility is a key reason why the contracts are so attractive to those taking a pragmatic approach to personal relationships.
The major downside of relationship contracts is that to some, they demonstrate a lack of long-term commitment. Many women still long for the fairy tale wedding day that is the centre of romantic culture throughout the world. For many, marriage provides the thought at least that the relationship will last through to old age and that each partner's assets will be pooled for the benefit of both.
Society is very accepting of traditional marriages, which typically bring family and friends together for an emotionally pleasing landmark event. There aren't that many relationship contract parties or traditional 'stag and hen' relationship agreement parties after all.
Some say a relationship contract takes away the love and romance of a relationship when compared to marriage. But when you compare the end of a relationship contract to that of a marriage, the former option is considerably less traumatic.
We recommend to all of our clients at Berkeley International that they take legal advice about their proposed relationship contract so that they are fully aware of the pros and cons of such an agreement.
Our advice for making relationship agreements work
- Be as truthful as possible, to yourself and your partner, about your expectations.
- Discuss this in neutral territory.
- Listen to what is important to your partner.
- Be prepared to negotiate and be flexible.
- Do what's best for you and don't worry too much about what others may think.
- Expect to have to explain the arrangement with older family members who might be totally unfamiliar with this approach.
- If your partner is suggesting a relationship contract and you were hoping for a marriage proposal, stay open-minded.
- Don't worry if you fail to create a relationship agreement. The conflict in opinion could be the most useful feedback you've ever had.
- Remember that there are no legal repercussions to breaking the agreement but there will be probably be serious social repercussions, such as the relationship ending, having a break or the possibility of marriage being ruled out.