Last month we talked about the importance of prenuptial agreements (and even pet-nups for your furry friends!), but for unmarried couples the situation is slightly different as they are not protected by the same legal rights as married couples and property rights are very different if you are cohabiting. A cohabitation agreement helps to fill these gaps and protect the assets, finances, and security of cohabiting couples should they decide to separate in the future.
Under current UK family law, if a cohabiting couple separates and there is no agreement in place, they will not necessarily have any legal right to assets and property unless they are in joint names. This means that one partner may be left financially unstable, or with very little recourse to claim a portion of the family home they have lived in and contributed towards. Cohabiting couples may also lose out on other future safeguarding such as pension sharing and maintenance, unless this has been stipulated in an official agreement.
When a married couple separates, all of their assets and liabilities are taken into consideration by the court and divided as fairly as possible in relation to each of their contributions and requirements. When it comes to cohabiting couples, however, the court is only able to look at joint assets and official shares in property – any individual assets, savings, pensions, and non-financial contributions (for example: staying home to raise children) will not be considered as part of a couple’s combined assets. Unfortunately, this often means that one party will be left with much less than another.
Property rights in particular can be difficult to establish without a Declaration of Trust which sets out the division of ownership of a property, including each individual’s share, and the proportion of their investment. A cohabitation agreement can help to clarify a couple’s intentions for the property, including who will pay the mortgage and in what proportion during the relationship, and what will happen to the property in the event of separation, eg: whether one party will stay in the home, buy out the other’s share, or sell the property and split the proceeds.
Similarly, bills, loans and other debts can cause issues upon separation when they are in sole names, even if both members of a couple have been contributing to them. A claim for joint responsibility will need to be made if these liabilities are not laid out clearly on a cohabitation agreement.
Cohabitation is the UK’s fastest-growing type of family, with over a quarter of all children growing up in cohabiting households. Almost half of all cohabiting couples have children, and there is a serious need for greater legal protection for these families to bring family law in line with the rights afforded to married couples. In the meantime, a cohabitation agreement (along with any other necessary documents setting out joint ownership, such as a Deed of Trust or a Will) is vital for any unmarried couples who want to protect their financial stability against whatever the future might bring.
To speak to a solicitor about drawing up a cohabitation agreement, or to discuss issues around separation, get in touch with the friendly family lawyers at Frances Lindsay & Co.
Find out more about your rights as a cohabitant below: