A cohabitation agreement confirms the rights and responsibilities of people who are living together but are not married, in respect of property, savings, income, outgoings and ongoing financial obligations – if their relationship breaks down or one cohabitee dies.
Unmarried couples living together don’t have any automatic rights regarding property or finances. A cohabitation agreement serves as legal confirmation of what belongs to who, whether either party is to acquire an interest in the property or assets of the other, and provides a mechanism for what should happen if the relationship ends or one cohabitee passes away.
Protect your interests with a Cohabitation Agreement
The ‘common-law marriage’ myth continues to put countless individuals in difficult situations. Living with someone does not give you anywhere near the same rights as a married couple, regardless of how long you’ve lived together or whether you have children.
A cohabitation agreement helps address this problem. It’s a clear statement of intent by both parties, so excluding assets inherited by one party will make the other party’s claim to them far more difficult. And, as outlined above, if the agreement contains a declaration of trust, this is a legally binding document that can only be set aside in few and very exceptional circumstances. With that in mind, it’s important to consider the following:
do you have a document that confirms how the equity in any jointly owned property is to be divided on relationship breakdown or death?
if you spend money improving the property or paying off the mortgage, is that money recoverable on relationship breakdown or death?
if a property is in your partner’s sole name but you’ve been contributing to the mortgage and bills, what happens on relationship breakdown or death?
if a property is in your partner’s sole name, do you have a formal right to live there for a period if they pass away?
is your business safe from claims by your unmarried partner?
do you understand how funds in sole and joint bank accounts are treated differently on relationship breakdown or death?
are you protected if your partner stops paying a mortgage in your joint names?
what happens if your partner stops paying the utility bills?
do you benefit under your partner’s life insurance or pension policies as a cohabitee?
While both relationship breakdown and death may seem unlikely or far off, it’s important to ensure you and your partner have clarity and certainty about what happens when these situations arise.
Without a cohabitation agreement to confirm your rights relating to a property, or to protect your property against claims brought by an unmarried partner, you could end up facing a long, stressful and expensive dispute.
Discuss your best options with proven specialists
Our cohabitation specialists can talk you through your needs and circumstances in respect of any of the above questions, and discuss any queries or concerns you may have. This is the first and most important step to ensuring you’re fully protected for the future.
Legally binding protection of individual and shared assets for cohabitees
A cohabitation agreement may seem like an unromantic notion, but more and more individuals are using money gifted or inherited by family members or saved over a significant period of time, to purchase a property. Understandably, they want peace of mind that this money is ‘ring-fenced’ should their cohabiting relationship ever break down.
Cohabitation agreements from Stephens Scown are completely bespoke, and can be drafted to include provision for almost any eventuality.
Who can enter into a cohabitation agreement?
A cohabitation agreement is suitable for any unmarried cohabiting couple who wish to put an agreement in place that formally records their respective positions – both during their relationship and if it breaks down. Cohabitation agreements can protect an individual’s properties and business assets in their sole name, and we are increasingly asked to prepare cohabitation agreements for people looking to protect their assets when they move in with a new partner following a divorce.
A common misconception is that parties can only enter into a cohabitation agreement when cohabitation commences. While it is preferable to do so at this point, the agreement can be drafted for couples who’ve been living together for several years – and it’s always advisable, in order to protect personal assets.
What if we’re living together purely as friends?
We also regularly draft ‘companionship agreements’ for individuals who have chosen to live with a friend simply for company, but not for romantic reasons.
Can a cohabitation agreement protect money I’ve inherited?
We regularly prepare cohabitation agreements for people who’ve received a large inheritance and wish to protect it from a claim by their cohabiting partner, should the relationship break down. We also discuss the importance of these agreements regularly with parents or grandparents looking to gift a sum to their child or grandchild, but want to ensure this sum is protected.
Protecting property
Where property is involved, we strongly advise having a declaration of trust as part of a cohabitation agreement. A declaration of trust is a legally binding deed that confirms each party’s share in a property. We also strongly advise appointing a cohabitation specialist to prepare a declaration of trust, as a poorly prepared document can potentially do more harm than good. Find out more here.
How much can a dispute on separation cost?
Without a cohabitation agreement, the breakdown of a relationship can incur significant legal costs, simply in trying to determine what was intended at the time your cohabitation commenced. Costs can be in the region of £25,000 to £35,000, plus VAT and disbursements, but they can easily be avoided by putting in place a cohabitation agreement.
Cohabitation agreements can be updated and amended via a solicitor, should your circumstances change.
