Unmarried couples and cohabitation agreements – do I need one?

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Moving in with your partner should be a very exciting time and thinking about the breakdown of your relationship, or the untimely death of one party, is usually the last on the list of considerations. However,  the number of couples choosing to live together without getting married is rising significantly and therefore, careful thought should be given (prior to starting to live together) to what might happen, financially, if the worst were to happen.

Despite it being a common myth that you can have a ‘common law’ spouse who has the same rights as a married partner, this is not the case and people who live together have very few, clearly defined, legal rights in relation to financial matters.

Proceedings, between unmarried couples, to resolve issues regarding the ownership of property upon the breakdown of a relationship can be lengthy and expensive, with no guarantee of success.  There is also an added risk that, if a claim fails, the unsuccessful party could be responsible for the other party’s legal fees which could be significant.

Further, in the event of one partner dying without leaving a Will, the Intestacy rules do not make provision for the surviving party to inherit their partner’s estate automatically.  In this case, the surviving party may be required to issue proceedings under the Inheritance (Provision for Family and Dependants) Act 1975 and will have to show they were a dependent of the deceased and reliant upon their financial support.  The outcome is not guaranteed and can be costly, taking a long time to resolve.

What is the solution?

One very simple and inexpensive option is for couples to enter into a cohabitation agreement.  This is a legal document between two parties which sets out clearly how their combined assets will be dealt with both during the relationship and upon any breakdown of the relationship.  This provides clarity in the event of a relationship breakdown and upon death (although the parties should each both put in place Wills at the same time to protect the position upon death).

What should the cohabitation agreement include?

The agreement should:

  1. State the full names of both parties.
  2. Confirm how long the agreement will last for.
  3. Confirm that the parties intend the agreement to be legally binding.
  4. Specifically refer to jointly owned assets and state how they are to be dealt with.
  5. Refer to any assets owned in one party’s sole name and confirm what will happen to those assets.
  6. Specify how the assets will be dealt with during the relationship (for example, state that neither party can sell or deal with property without the prior consent of the other party).
  7. Specify how the rent/mortgage/bills will be split.
  8. Deal with any joint accounts, savings or pension assets.
  9. Set out arrangements for children or pets.
  10. Set out a date for a review of the cohabitation agreement to consider any changes in circumstances and how those may affect the agreement.

Benefits

A cohabitation agreement can be beneficial because they:

(1) Provide certainty

(2) Are legally binding providing they are drafted correctly

(3) Can be revised in the event of any change in circumstances

(4) Can save time and money in the long term and can avoid lengthy Court proceedings

(5) Are effective for ‘non-romantic’ people who wish to live together but seek certainty if those arrangements break down.

Contact IBB’s family law experts today

IBB Solicitors’ family law practice provides expert advice for high-net-worth individuals in divorce cases involving assets ranging from £2m to £10m; pre-nuptial and post-nuptial agreementsco-habitation agreements and pre-civil partnership agreements; and representing children in private law cases in disputes involving parental alienation, contact and residence arrangements following the breakdown of parental relationships. To contact the family law team please email familylaw@ibblaw.co.uk or call 03456 381381.