A “no-nup” cohabitation agreement is essential for unmarried couples, as English law does not afford cohabiting couples the same legal protection and rights as for married couples.
According to the Office for National Statistics, cohabiting couple families are the fastest growing family type in the UK. In the last ten years (to 2016), the number of cohabiting couple families more than doubled from 1.5 to 3.3 million families. Couple this with the misconception of “common law husband and wife” and the result is an increasing number of people without legal protection after a relationship ends.
Happily unmarried but legally living in sin
Research by the Co-op suggests a staggering one in four cohabitees believes they have the same legal protection as married couples. Under English law, there is no common-law husband and wife status. The law does not recognise in any meaningful way a living-together relationship outside marriage or civil partnership.
If a relationship breaks down, a cohabitee has no right to claim against a partner for maintenance or a share of family assets in the same way as married couples do. This applies irrespective of how long the couple has lived together and whether or not they have children.
What is a cohabitation agreement?
A cohabitation agreement (also known as a living together agreement or cohabitation contract) is a legally binding document regulating a couple’s affairs both during the relationship and, importantly, in the event the relationship breaks down. The agreement deals with money, property, children, assets and other arrangements. The fundamental purpose is to clarify ownership of assets, practicalities and logistics in the event of a separation.
A symbol of commitment
It may seem clinical and unromantic, but if future heartache does occur, a cohabitation agreement could ease future headaches. A cohabitation agreement is a sensible way to ensure that in the event of a break up there is an amicable agreement that will save additional stress, time and potentially large legal bills.
A cohabitation agreement provides clarity in the near and long term and may add security to the relationship. In fact, a cohabitation agreement will provide a much greater degree of certainty on separation than for a married couple entering divorce proceedings. It will also save time, stress and potentially high legal fees of separating without an agreement.
Cohabitation agreements are sometimes avoided as couples think the agreement indicates a degree of mistrust in the relationship. However, couples that view the agreement more as a “symbol of commitment” for the long term, giving reassurance about assets and security for the future may be on a better track.
Terms of a cohabitation agreement
Each party needs independent legal advice in relation to the agreement. It is a collaborative rather than a contentious agreement and parties should be able to agree the main provisions amicably.
Prior to entering a cohabitation agreement, it is important to have open, honest discussions. Full and frank financial disclosure with your partner not only reduces the risk of the agreement being set aside for misrepresentation but will aid agreement of its terms.
A cohabitation agreement will typically include provisions relating to:
- ownership of assets and how these will be divided in the case of a break up;
- ownership of property, including percentage of equity held and how financial contributions towards the home will be treated. Practicalities for dealing with property after a separation, such as a mechanism for buying the other partner out of the house;
- division of other belongings, savings, managing bank accounts and any debts, dealing with joint purchases such as a car, contributions towards household bills and what happens to the family pet after a separation;
- support and care of any children;
- life insurance, whether a partner should be nominated as beneficiary and what happens if one party dies;
- entitlement to your partner’s private pension will depend on the pension scheme rules. If you are not married or in a registered civil partnership your partner is not entitled to any state pension benefits or bereavement allowances. Employers may extend benefits such as health insurance to unmarried partners.
- “relationship rules” although clients often wish to include provisions on responsibilities for housework etc., these points are better dealt with between yourselves as such “rules” may undermine the certainty and purpose of the agreement. You should not need to call your lawyer every time your partner forgets to put the bins out!
- a review of the agreement, either by reference to specific dates or on the occurrence of significant events such as having children, inheritance or starting your own business. Any change in the law governing cohabitation should also trigger a review; and
- the terms of the agreement should remain confidential.
Other documents should be considered in conjunction with a cohabitation agreement to protect each party’s interests. A declaration of trust deals with property ownership and acquiring interest in a property. If you want your partner to be responsible for your affairs should you become incapacitated, draw up a lasting power of attorney. Having an up to date will is essential as unlike with married couples, your partner will not automatically inherit. Inheritance tax planning should also be considered as marital exemptions are not available.
The risks of not having a cohabitation agreement
It is often the less financially secure partner who suffers when a cohabiting couple separates. The court does not have the same flexibility to achieve what is fair as when people are married and the process tends to be more complex and therefore more expensive.
The lack of a cohabitation agreement can lead to confusion, misunderstanding and an expensive legal bill after separation.
This is a complicated area of law and in these sorts of cases prevention is almost always far better than cure. It would be prudent for all cohabiting couples to take advice and give consideration to whether and how they need to protect their rights and assets through a cohabitation agreement.
Rosie Bracher are specialist family law solicitors based in Barnstaple. We have the knowledge and expertise to advise you on your cohabitation rights and agreement. Please contact our office on 01271 314 904 and arrange to speak to one of our team.