The importance of legal agreements for cohabiting couples

Categories: News

Family Solicitor Tia Bickley is passionate about cohabiting couples protecting their rights and safeguarding their futures in the event of separation. Here she discusses the options available to those people who want to live together while enjoying legal security.

Despite numerous attempts to reform the law, what happens when a cohabitating couple separates remains a thorny and often misunderstood issue.

The latest figures show there were 3.6m cohabiting couples in the UK in 2021 – and that number has almost certainly increased in the proceeding years. In the same year, 51% of babies were born to unmarried couples.

Many people still believe that by simply living together they acquire rights or claims over their partner’s assets. This is sometimes referred to as common law marriage – but this belief is incorrect and has no legal basis.

When a married couple breaks up, a 50:50 split of all assets is generally the starting point which is not the case for people who have simply been living together.

When a cohabiting couple separates the approach is different. However, in either circumstances where there are children under 16 involved, there will be financial responsibilities that flow, including child maintenance requirements.

Otherwise, it’s a very grey and challenging area. For example, one person may have moved into their partner’s home and contributed significantly towards the running of that property or even the mortgage. However, upon separation they have no automatic interest in the property they lived in and they could ultimately end up out of pocket and homeless.

They might have been living together for 20 years or more – and the woman may have given up a career to care for children.

Equally, if an unmarried couple purchases a property together, it’s likely that they will be listed as joint owners, regardless of whether one person contributed significantly more than the other unless there is a Declaration of Trust.

There are legal routes available to challenge rights to assets upon separation – but it’s often a long and complex process.

Cohabitants also do not have the same financial protections upon the death of one of the parties. This means if there is no valid will, assets could be passed down under the rules of intestacy, potentially excluding the longstanding partner altogether.

Labour has mooted a reform in the law – but until that happens, there are two main ways cohabitating couples can protect their interests…

Cohabitation Agreement

A Cohabitation Agreement is legally binding and sets out how the finances and assets will be divided both in a relationship and if separation occurs.

This can cover how a property is distributed, how other significant belongings such as cars are split, any lump sums due or how mortgage payments and other outgoings will be met moving forward.

It could also cover liabilities such as credit cards, or ongoing expenses such as school fees.

Declaration of Trust

A Declaration of Trust can be created before or after a property is purchased by two people – preferably upon purchase of the property/during the conveyancing transaction.

This document can set out the ownership rights of the home, whether that is a 50:50 split or otherwise. This is particularly useful if one of the purchasers has paid significantly more than the other and would like to protect their deposit for example.

This removes any uncertainty about what happens to each person’s money when the property is sold or when one person wants to be bought out.

We understand that having conversations around potential separation can be difficult when a relationship is going well, but it is vitally important. Some basic legal agreements can help to avoid significant and stressful arguments in the future.

ORJ has some of the region’s most experienced and trusted family lawyers. Speak to us today for support and advice on creating a more secure future.

Call Tia on 01785 223440 or email team@orj.co.uk