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Cohabitation agreements

Securing your financial future 

With a rising number of couples choosing to live together rather than to marry, the incidents of long standing, non-married couples breaking up is on the increase. And unless careful consideration was given at the outset the consequences in relation to their respective assets can be disastrous.

As lawyers advising on such matters over many years we are often asked what will happen to property owned by each of the partners should the relationship break down. They worry if they “move” their partner into their property the partner will then have a “claim” on the property or other assets even if they are not married.

If one of the parties has previously been married and divorced they may wish to protect the assets which are in their sole name.

It is becoming increasingly common for couples in this position to have a Cohabitation or Living Together Agreement drawn up.

You might wonder why this is relevant but once you realise that couples that live together can make virtually no use of the system of law available to married persons and are therefore much more vulnerable on the break up of the relationship or the death of one party.

Whereas the Courts have power to adjust property rights on divorce, they can only determine who owns property and in what shares on the basis of actual contributions of unmarried couples and/or their intentions. It may be difficult to prove actual contributions and on separation either or both of the parties may have honestly forgotten (or conveniently forgotten) their original intentions.

A cohabitation agreement provides the framework for couples to record their intentions and record their respective contributions. This in turn will hopefully set aside any fears they may have prior to living together and they can feel safe in the knowledge that if the relationship was to break down, then the agreement will safeguard them financially.

The terms to be included in the agreement are a matter for the parties involved, however it is extremely important that both parties seek independent legal advice. The agreement can include details about property, payment of the mortgage, outgoings, ownership of contents, liability for debt, ownership of bank accounts and much more.

The agreement will need to be precise and detailed and confirm that the parties intend to create legal relations which will then ensure that the agreement is enforceable.

The parties may be advised in relation to a Deed of Trust being drafted which sets out the ownership and respective beneficial interests in the home.

It is also essential that couples living together both make Wills particularly because of the lack of protection under the Intestacy Rules. Any existing Wills should be checked to ensure they are appropriate for the couple’s present circumstances, especially where one or both have pre-existing obligations such as children from a previous marriage or relationship.