The number of people choosing to cohabit is steadily increasing with unmarried cohabiting couples becoming the fastest growing family unit in England & Wales. Whether choosing to purchase or live in a property with a partner, friend, or family member, a cohabitation agreement is a useful document that sets out and provides a clear understanding of how your finances, assets and property are to be shared and managed whilst living together, or in the unfortunate event of ill health, death, or separation. What is a cohabitation agreement? A cohabitation agreement is a legal document between unmarried couples who are living together. It may be executed before or after a couple have started cohabiting, and can record a host of arrangements, including: Their rights and responsibilities in relation to a property in which they live or intend on living in together; The management of their finances, for example how joint or sole outgoings are to be met; What will happen to a property or other assets upon the breakdown of their cohabiting relationship; The ownership, management and ongoing costs associated with assets such as cars, artwork, furniture and white goods; The arrangements in respect of any children they may have together, including the provision and funding of childcare. What are the advantages of a cohabitation agreement? Whilst there has been a recent call for reform in the law regarding the rights of cohabiting couples, it is important to bear in mind that the current law gives cohabiting couples only limited rights on separation, as opposed to the extensive legal protections afforded to married or civil partnered couples. The scope of cohabitation agreements are wide ranging and extend far beyond the recording of the ownership and management of properties and assets. Primarily, they are a useful way for cohabiting couples to record their intentions, from the outset, as to the ownership and management of their financial arrangements during cohabitation as well as arrangements in respect of any children they may have together. By entering into a well drafted cohabitation agreement, couples may clearly record their respective legal and beneficial interests in any property they own together or separately, which could be disputed in the future if no record of this is clearly agreed and properly documented. A cohabitation agreement can therefore reduce the need for unwanted and uncertain litigation and significant legal costs in such instance. Cohabitation agreements are particularly useful when one party owns a property in their sole name in which they intend to live with their (non-owning) partner but together will be making financial contributions towards the property and household by way of mortgage repayments, the cost of maintenance and renovation, etc. This is a common scenario for those entering a relationship later in life who may have built up a lifetime’s worth of assets, perhaps following an earlier divorce or separation, and/or following the receipt of inheritance. Similarly, when parents have either gifted or invested funds into a property in which their child intends on living with their partner, a cohabitation agreement may be useful to evidence such investment to safeguard their investment, and their children’s inheritance. A cohabitation agreement can be tailored to specifically suit a couple’s needs, and the documented arrangements may include: How a property is to be marketed or sold if there is a breakdown of the relationship, or a mechanism for one party to purchase the other’s share. If, and how much of a share a non-owning party may have in a property if they have made financial and/ or domestic contributions; The closure of joint accounts and the division of jointly acquired assets and belongings. Whilst cohabitation agreements are not legally binding, they do carry weight and if drafted clearly and executed correctly, their validity and enforceability is likely to be upheld. It is important to note however, that cohabitation agreements are not a substitute for a Declaration of Trust that records the shares in which jointly owned property is held (although a cohabitation agreement may include and record a more extensive range of issues). Similarly, a cohabitation agreement is also not a substitute for a testamentary will, and/ or pension and policy nominations. In such instances, individuals should consider having these additional documents put in place to record their wishes and intentions. How can Morr & Co help? If you have any questions on cohabitation agreements or would like any further information on the content of this article, please do not hesitate to contact our Family law team team on 01737 854500 or email info@morrlaw.com and a member of our expert team will get back to you. Disclaimer Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position. Authored by Lydia Pilati Associate Solicitor Message Tags Insights On this page Related Stories Cohabiting couples – writing a Will Importance of legal advice for cohabiting couples View more Contact our team today to find out more Contact us
