When Cohabiting Couples Separate: How to Divide Your Assets

From a legal point of view, separating as a cohabiting couple is both easier and more difficult than divorcing as a married couple. On the upside,  you do not need to change your legal status from married to unmarried by going through the process of divorce, but it’s still important to be aware that cohabiting couples have very few rights in terms of claiming the fair division of partner’s assets.

Unless a co-habitation or living together agreement is drawn up with the intention of making it legally binding, cohabitating couples do not enter into any form of contractual arrangement in relation to their financial affairs in the same way that married couples do. A cohabitation agreement will make the process of separation easier in terms of sorting out the practicalities of your separation, and will ensure that your assets are dealt with in the way you have agreed in better times.

Some cohabiting couples will be able to negotiate the terms of their separation privately, while others may need some legal advice and support to help them determine how to divide their assets. However, any agreement, if it is to be binding, must be drawn up properly and be underwritten by a full understanding of each other’s finances and after both parties have had the benefit of legal advice.  

Here’s a brief guide on what to expect if you have no living together agreement and things get difficult:

Division of Possessions

Personal possessions include items such as household furniture and ornamental goods. For cohabitees, personal possessions remain the property of the individual, however jointly owned possessions may be divided in the event of separation. The problem is how to decide who gets what.

Sometimes it is possible to request a share in a personal possession, but as a general rule, these types of assets are divided according to ownership rather than need.

Jointly-owned possessions will be divided according to the share each party put into their purchase, but how do you divide a sofa? You’ll also have to decide whether one party buys out the other’s share, or whether you sell each item and divide the proceeds.  Another option is to divide your jointly-owned possessions in a way that suits you both – if you cannot come to an agreement between you, a good lawyer mediator is a great option for helping you to make a mutually beneficial decision.

Division of Property

The division of property assets should be fairly straightforward when the property is in both party’s names. If, however, a property is in just one person’s name, there are likely to be issues if the other is hoping to claim a proportion of its value. In this case, the other partner will need to prove that they have contributed towards the deposit or mortgage, or that there was a ‘common intention’ for the property to be owned jointly. However, this type of situation can be complicated and costly and could result in court proceedings. A trust deed entered into when the property is purchased, or a living together agreement if one or other is moving into the other’s house, will avoid any difficulties in future.

Division of Pensions and Savings

As with personal possessions and property, the division of your savings and pensions will depend on whose name they are held in. If a savings account or pension is in your sole name then your partner will not be able to claim a proportion. The same applies to personal and joint bank accounts.

Joint savings and pensions can be divided in equal shares unless you can prove that you have contributed more than your partner. In this instance you may need the advice of your solicitor to help you to establish how this division will be made.

And remember if you make a verbal arrangement for you to pay the bills while your partner saves their money ‘for both of you’ in the event of a separation you could find yourself with nothing.

Drawing up a cohabitation or living together agreement

If you’re interested in putting together a cohabitation agreement with your partner, your solicitor will be able to help you to establish how you would like to divide up any assets you own in the event of separation. While it may not be the most wildly romantic thing to do as a couple, a cohabitation agreement should really be viewed much like any other insurance policy – a legally binding protective document that ensures you receive what you are entitled to should the worst happen.

Get in touch with our down-to-earth legal team at Frances Lindsay & Co for advice and support on cohabitation agreements, separation, mediation Whatever your situation, we can help you negotiate any legal issues to do with your relationship.