Unmarried couples, cohabitation agreements and dispelling the myth

‘Common law’ marriage is a myth.

Living as an unmarried couple for a period of time (regardless of how lengthy that period of time is) does not give an unmarried partner similar rights to that of a married spouse, such as automatically permitting them to seek a share of their partner’s property/pension assets, a capital lump sum payment and/or maintenance payments from their partner in the event their relationship was to end.

This means that when an unmarried cohabiting couple (who are not in a civil partnership) separate, it is the strict and rigid principles of property law, contract law and the law of trusts that govern the financial aspects of the relationship breakdown. This puts many unmarried cohabiting partners in potentially quite severe financial danger upon separation.

Calls for a change in the law to provide certain protections for unmarried couples, such as a campaign by Resolution (www.resolution.org.uk/cohabitation/) and Lord Marks’ Cohabitation Rights Private Members’ Bill, seem unlikely to bring about legislative change anytime soon, not least due to the Brexit quagmire dominating Parliamentary time. Therefore, an expertly drafted cohabitation agreement can mean that upon separation, potentially expensive and protracted disputes are avoided (or at the very least minimised) and they can give a couple some certainty and peace of mind that each party will be treated in accordance with the terms of a carefully negotiated agreement.

A cohabitation agreement can be made at any time by an unmarried cohabiting couple, whether at the outset of them moving in together or after many years of them living together. A cohabitation agreement is a written contract which will cover things such as:

  • What financial arrangements the parties have decided to implement whilst living together (e.g. how each person will contribute to household outgoings such as rent/mortgage, utility bills etc).
  • Who owns what assets and property at the time the agreement is entered into, and in what proportions.
  • What each party’s debts are (e.g. credit card/loan liabilities and finance agreements) at the time the agreement is entered into and whether they are the sole liabilities of one party or whether they are joint debts.
  • Whether any gift, inheritance or unexpected good fortune (such as a lottery win) received by either party should remain the separate property of that party upon separation.
  • Pension and death-in-service benefits – some pensions may give the opportunity to make provision for a cohabitant partner via pension benefit nominations, also death-in-service benefits nominations can be covered.
  • How property, assets, and personal possessions should be divided and how joint debts and bank accounts are to be dealt with in the event the relationship breaks down.
  • Potential major life events/changes such as the death of a party, a party becoming ill, and the needs of any future children of the relationship.
  • Who will take ownership of any pets acquired during the relationship upon separation.

A cohabitation agreement is likely to be followed by the court as a legally binding contract provided key criteria are met, including:

  • Both parties entering into it freely and voluntarily, with it recorded that they intend for it to be legally binding on them;
  • It needs to be in the form of a deed signed by both parties and witnessed;
  • Both parties receiving independent legal advice; and
  • Both parties disclosing to each other their respective financial positions and other relevant circumstances

Cohabitation agreements should be made in addition to a declaration of trust regarding property ownership and the parties should also consider taking out life insurance and having Wills drafted.

As with any contract a court may set aside a cohabitation agreement and not uphold its terms in circumstances where there has been fraud, misrepresentation, undue influence or duress.

It is important to note that unlike the financial arrangements for the parties covered in a cohabitation agreement, arrangements recorded in such an agreement for children will not be binding and cannot be enforced as contractual terms. Regardless of any arrangements for children recorded in a cohabitation agreement it is always open for a parent to make a claim for financial provision for their child against the other parent under Schedule 1 of the Children Act 1989 or for child maintenance via the Child Maintenance Service against a non-resident parent.

Many couples find the process of negotiating a cohabitation agreement gives them a chance to carefully consider and discuss how living together is going to be implemented both financially and on a practical day to day level by them, which significantly reduces the risk of arguments about money, property and emotive topics such as the ownership of cherished pets in the future.

RDP Law are here to help if you are looking to explore cohabitation agreements or would like advice regarding the law concerning unmarried couples, or issues concerning arrangements for children.