Cohabitation

Common law marriage is a myth

Common law marriage is a myth. Contrary to popular belief, there is no such thing as common law marriage in England and Wales. The law for separating unmarried couples is completely different to those who are married or who are in a civil partnership.

Upon divorce, the court uses use the statutory factors in section 25 of the Matrimonial Causes Act 1973 to try to achieve a ‘fair’ outcome where the parties respective capital and income needs are considered and hopefully met. Generally, the starting point is a 50/50 split and indeed the House of Lords Case, White v White referred to the ‘yardstick of equality’ in which Lord Nichols said that departure from equality should only be considered if there is a good reason to do so.

However, for unmarried couples, there is no protection or legislation to ensure that the assets are divided in a fair manner. This often comes as a shock to unmarried couples upon separation or when one party dies. For unmarried couples, disputes relating to their property fall to be considered pursuant to the Law of Property Act 1925 which is almost 100 years old along with the provisions under The Trusts of Land and Appointment of Trustees Act 1996.

Most assets are divided according to strict principles of ownership, although property can be dealt with differently.

Generally, liabilities and assets will be retained by the owner, including pensions. In relation to property, the best way that unmarried couples can protect their interest in a property is by the creation of an express written declaration on the TR1 (Transfer Deed) at the time that the interest in the property is acquired. If they later change their intention about a non-owner gaining an interest in a property, for example by contributing towards capital repayments on a mortgage, it is advised that this interest in recorded in writing at the very least, and ideally in a trust document. Unmarried couples should seek advice from a property solicitor to ensure that the Property Title Deeds and the Transfer Deed accurately records their intentions for how they will hold the property and in what specific shares it will be held.

The legal and beneficial interest in a property can be held differently, for example the property might be in the sole legal name of one party, but both parties may have a beneficial interest in the property. The non-owning partner can attempt to claim a beneficial interest in a property in the form of a trust in certain specific situations.

Without any written agreement relating to the interest in the property, respective parties may need to impute or infer a beneficial interest in a property. Essentially the courts look to events that might have happened years ago to infer or impute what the couple intended when buying a property/creating a trust which is a rather fictious process. The law surrounding this area of law is complicated and specialist legal advice is essential. Ultimately, no matter how long a couple have been together, raised a family and pooled their income and resources, if a property is owned in the legal name of just one party, then without the existence of any sort of trust, the person without the legal interest could be left with nothing. This is in stark contrast to the starting point of equal division upon divorce.

Unmarried couples can help to protect themselves by entering into a Cohabitation Agreement or a ‘Living Together Agreement’. These agreements are a bespoke contract and can include anything that the parties would like. Usually, it includes property and any significant assets, liabilities, and pensions. Whilst a these agreements are persuasive, they are not binding and a judge can make different orders based on the particular facts of the case. However, cohabitation or living together agreements provide written evidence of the parties’ intentions at the time the property was acquired/the trust created and can be highly persuasive if court proceedings are commenced.

The situation upon death for unmarried couples is slightly better in that a surviving cohabitee can make a claim against their deceased partner’s estate (under the Inheritance Act 1975) and to qualify, the parties must have lived together for at least 2 years before the death. However, in order to ensure your assets are bequeathed as you wish them to be on death and to avoid your partner having to apply under the 1975 Act, you should prepare/update/review your Will regularly. Under the Law of Intestacy cohabitees are excluded from the class of persons who will receive a share of their deceased partner’s estate on their death hence they need to apply under the Act.

If you need advice on separation, entering into a cohabitation/living together agreement or advice on your Will, please contact Kate Newton on 01483 679332 or email [email protected].