The benefits of a cohabitation agreement if you choose not to marry or enter into a civil partnership
We’ve written before about the problems for people who choose to cohabit without formalising their relationship through marriage or civil partnership. While Resolution, the national family lawyers’ association, continues to campaign for recognition of cohabitees, the current position is that the relationship is not recognised. You could have lived together for years, but on death, or if you split up, there is no ‘automatic’ recognition of the relationship. Cohabiting partners are not recognised under the intestacy rules; the systems that kick in to ensure a fair division of assets and property on divorce do not apply when a cohabiting couple decides to part company. The courts can only work with bits and pieces of legislation and case law related to land law and the law of trusts – and this can be a complex, not to mention costly, exercise.
How can a cohabitation agreement help?
A cohabitation agreement is a way of documenting who owns what and how you will split up the property you live in and your assets – bank accounts and investments – should the relationship fail. If you have children, a cohabitation agreement can include details about how you would share responsibility and pay for their maintenance. A cohabitation agreement can also (and should also) cover your liabilities – for example any debts – and set out how you intend to manage your finances on a day to day basis for the course of the relationship, as well as what will happen if you split up.
If it seems a bit cold and clinical – a bit ‘unromantic’ (as Paul McCartney infamously declared), consider what would happen if you found yourself at the end of the relationship with no protection, faced with a partner who was not prepared to recognise your contribution. Unless property has been jointly purchased, you would have no right to a share in it. If a debt was in your name, you would end up solely responsible for paying it off, even if it was taken out for the benefit of you as a couple – or even for your partner alone. Imagine trying to sort all this stuff out when your relationship is already in trouble…
Is a cohabitation agreement a legally binding document?
In the past, cohabitation agreements were viewed, at best, as an expression of the parties’ wishes – but the courts were reluctant to enforce them on the basis that cohabitation contracts undermined marriage. In the face of the sheer numbers of couples choosing not to get married, things have shifted to a certain extent. You need to make sure the cohabitation agreement is properly drawn up, and both of you need to take independent legal advice about the effect of the document. If you do this, and your situation has not changed between the time the agreement was drawn up and the separation (for example, you have not had children in the intervening period), the agreement should be enforceable by the courts.
Of course, there are costs involved in drawing up a cohabitation agreement. However, these are significantly less than the costs that might be involved should you split up and end up having to take legal action to recover property or assets. It will also make a process that will inevitably be stressful and distressing just a little bit easier.
What other steps can I take to protect myself – and my partner?
- Keep your cohabitation agreement up to date
A cohabitation agreement is a sensible step to take, particularly if you are buying a property together, or if one of you is moving in to a property owned by the other, but you will be making contributions to the mortgage or bills. Once the agreement is drawn up, it’s important to keep it updated. Like a will, it is a ‘living document’. Any change in your circumstances needs to be reflected in the document – so if you have children, or invest in more property, or take on a financial liability such as a loan, these all need to be dealt with in an updated document.
- Make a will
As a cohabiting couple, it’s also important to take other steps to protect your position. It’s vital that you have valid wills in place. Without a will, your partner will have no rights in respect of your property and assets. He or she may end up having to make a claim for ‘maintenance’ under the Inheritance Act 1975 which can be a lengthy process with no guarantee of success. Many people put off making a will, or simply do not consider it – but it really is important.
- Check other paperwork relating to assets
Modern life brings with it a multitude of forms to fill, paperwork to complete. If you’re cohabiting, it’s worth taking time to read the small print. Take pension schemes – many provide for a spouse, or a partner to receive the pension in the event of your death – but there can be additional paperwork involved if you wish someone you are not married to or in a civil partnership with to benefit.
You can find online forms to create your own cohabitation agreement. These are helpful to an extent but if you want to be sure that the agreement will stand up in court should the worst happen, you should make sure the agreement is properly drawn up and both partners should take legal advice about the agreement and its effects.