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Cohabitation agreements

A Cohabitation Agreement is a document signed by a couple, which states the rights and responsibilities of each party in respect of property, savings, income, outgoings and ongoing financial obligations, both during the period of cohabitation and after it ends. The Agreement will also deal with the practicalities of what would happen if the relationship breaks down or in the unfortunate event that one party dies. As unromantic as the notion of a Cohabitation Agreement may seem, the costs, time and effort that will potentially be avoided in the future make it a necessity for an unmarried couple who are living together.

Who is a Cohabitation Agreement for?

A Cohabitation Agreement is for any cohabiting unmarried couple who wish to have an agreement in place that formally records their respective positions both during their relationship and on its breakdown. Individuals often use Cohabitation Agreements as a tool to protect properties and business assets in their sole name.

A common misconception is that parties can only enter into a Cohabitation Agreement at the time their cohabitation commences, when in fact the agreement can be drafted for couples who have been living together for a number of years. However, it is always best for the agreement to be entered into prior to the commencement of the cohabitation.

Will a Cohabitation Agreement protect money that I’ve inherited?

We regularly draft Cohabitation Agreements for clients who have received a large inheritance and wish to protect it from any future claim by their partner, should the relationship unfortunately break down.

A Cohabitation Agreement is seen as a clear statement of intention by the parties, so specifically excluding assets inherited by one party will make a claim by the other party to these assets far more difficult.

Why is a Cohabitation Agreement important?

The ‘common law marriage’ myth is leaving countless individuals in an incredibly difficult situation. You do not have the same rights as a married couple unless you have entered into a marriage despite living together as husband and wife. It is not the case that a couple who have been cohabiting for a certain number of years are in the same legal position as a couple who are married or in a civil partnership and it is important to be aware of the following:

  • Unmarried couples who have separate bank accounts have no right to access or share in the money in the other’s account.
  • Both parties will be fully liable for any debt in joint names. So if your partner stops making payments on a loan or mortgage, you will be liable for the full amount.
  • There is no automatic right to the other party’s pension or life insurance policies if they die.
  • There is no obligation on a party who has supported the other financially throughout their relationship to continue any financial support once the relationship has broken down.
  • One party paying a higher proportion of the mortgage or bills could give them a greater share of the equity in the property.
  • Where the home is in the name of only one party, the other could find themselves with no right to remain in the property on the owning party’s death.

Significant legal costs can be incurred on the breakdown of a relationship in trying to determine what was intended at the time the cohabitation commenced. These costs, which can be in the region of £25,000 – £35,000 plus VAT and disbursements, can be avoided by putting in place a Cohabitation Agreement.

A Cohabitation Agreement can be drafted to offer clarification and protection on all of the above points, as well as reassurance in relation to agreements for children including school fees, child maintenance and shared care.

There is no specific law governing unmarried couples and the mechanism used is outdated. It does not provide sufficient protection for couples who are cohabiting. As such, there is no legally binding agreement in relation to pre-marital cohabitation. However, Cohabitation Agreements are widely recognised by the Courts as the best way to record a Statement of Intention of the parties and Courts are reluctant to dispute their contents. Both parties are therefore strongly advised to seek independent legal advice before signing the document.

How is a Cohabitation Agreement put together?

Initially we will discuss your current situation with you and provide some general advice on what we would recommend to secure your position.

If you instruct us to draft a Cohabitation Agreement on your behalf, we will talk through your requirements with you and offer our suggestions on how the agreement can be drafted to fulfil these.

We will then provide you with a draft agreement and letter of advice explaining each section of the agreement. You will have the opportunity to raise any queries with us and suggest amendments. Once finalised, the agreement will be sent to your partner, who will be advised to seek independent legal advice. When the Cohabitation Agreement is agreed, it will be signed by both parties.

Cohabitation Agreements can be varied at a later date via a solicitor, should circumstances change.

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