The Importance of Cohabitation Agreements
In the UK it would appear that marriage rates are declining. The office for National Statistics stated that for 2020 ‘marriage rates have fallen to their lowest on record. For men, there were 7.4 marriages per 1,000 men not in a legal partnership compared with 19.1 in 2019; for women, there were 7.0 marriages per 1,000 women not in a legal partnership compared with 17.8 in 2019*. This is the lowest level on record and whilst the statistics could well be influenced by the pandemic it is suggestive of a trend. It is therefore reasonable to conclude that couples are either choosing to remain separate or cohabit.
Cohabitation may well involve a commitment to property investments and other assets and as such providing a basis for contributions and distribution of assets should the relationship fail is important. Fortunately, there is a legal basis for this, a cohabitation agreement.
These are available for unmarried couples who are planning to live together. They specify contributions to mortgages and bills and outline the basis for asset distribution should a relationship end.
For those who already own a property and a partner is joining them to live together, the agreement can protect the interests of the original property owner. They can specifically state that irrespective of any contributions made this does not imply any ownership of the property. Conversely if the original owner would like to open up the ownership of the property to their partner, then the basis for this can be clearly established in a cohabitation agreement. Failure to agree this through a binding agreement can lead to a very complex costly legal dispute and whilst drafting a cohabitation agreement may not seem especially romantic, it is better to agree something when you are on good terms as opposed to trying to resolve something later when the relationship may well be more stretched.
An agreement that sets out what would happen if you did split up isn’t an admission that you think you will, anymore than taking out building insurance means that your house will burn down. Making an agreement can strengthen your relationship by helping you feel happier and secure.
Assets in your sole name remain yours. Unmarried couples do not have the full menu of financial claims which are available to married couples. Therefore, there is no available claim against personal assets (e.g., personal savings) held in one partner’s name. If you have children together, there are some things the law can assist with. Without a cohabitation agreement in place, couples have to try and navigate how to divide their joint property, money, and belongings, usually at a time when emotions are at an all time high, and they aren’t feeling terribly fair.
Cohabitation agreements are much wider in scope than just property. As the law society points out they can set out arrangements for finances, property and children while you’re living together and if you split up.
It is never the wrong time to make a cohabitation agreement. Ideally, this should be done when you first move in together but late is still better than never, so even if you’ve been together 10 years it’s still a good idea as it sets out your intentions and clarifies your financial interests in joint assets.
Cohabitation agreements aren’t binding unless you write them as a legal deed. The court will usually follow them as long as what you have agreed is broadly fair and you were both honest about your finances at the time of entering into the agreement. The court is even more likely to uphold the agreement if both parties obtained independent legal advice separately prior to signing the agreement.
Agreements like this can go out of date. It is a good idea to keep it under review if circumstances change for example if you have a child, salaries change significantly or if one of you becomes unemployed or seriously ill.
Anyone wanting help in drafting a cohabitation agreement should contact our specialist family law team.
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