A guide to cohabitation agreements

About cohabitation agreements

As laws relating to the separation of cohabitees are entirely different to those which apply to married couples, it is wise to draw up a cohabitation agreement or contract. There is a commonly held belief that if you live with somebody for long enough you have entered into a ‘common law marriage’. This is simply wrong.  Simply living with someone does not grant an automatic right to a share in property or support. Dealing with the financial consequences of the breakdown of a relationship between unmarried parties can be an extremely stressful and expensive process which often takes time. Seeking legal advice and entering into a well drafted cohabitation agreement can alleviate many of these issues. Whilst couples may prefer not to discuss the relationship ending, in the long term it may save a great deal of money and heartbreak.

A cohabitation agreement can be entered into at any time during a relationship –they are not restricted to when couples first get together. Furthermore, the agreement can be ‘varied’ (changed) at any stage, perhaps due to a change in circumstances (for example having a child), but for the sake of clarity any changes should be recorded in writing, as opposed to being made verbally between the parties. Legal advice should always be sought on the implications of any proposed changes to the agreement.

Property rights: this can cover properties which are held in joint names or those that are in one party’s sole name. The agreement should reflect how the properties are owned and each party’s ‘beneficial interest’ (i.e. entitlement to a share in the net sale proceeds of the property). This should also be reflected in the title deeds for the property by way of a deed of trust. Consideration should also be given to who is paying the mortgage; who will pay the utility bills etc; whether there are any endowment policies or other policies linked to the mortgage – including how they are being paid for and how they will be dealt with upon separation. If there are life insurance policies, who is paying for them and how will they be dealt with?

Financial provision: Consideration should be given to whether a joint bank account should be set up, whether contributions to a joint bank account should be equal and upon separation how the sum in the joint bank account would be divided. The same consideration should be given to savings. Often pensions are overlooked and parties may wish to nominate their pension or any death-in- service benefits for the benefit of their partner (i.e. allocate the funds to them). This will, however, depend on whether the particular pension scheme is willing to accept such nominations.

Financial provision for children: whilst agreements can be entered into regarding child maintenance this does not prevent either party from applying to the Child Maintenance Service for a calculation. Whilst the parties are free to enter into a written agreement, after a period of one year has passed either party can make a referral to the Child Maintenance Service.

Child arrangements: whilst arrangements for any child of the family post separation can be provided for in the arrangement, if the couple later end up going to court the terms of the agreement may not be strictly enforced. The terms may, however, provide guidance or context in any dispute.

Death: consideration should be given to how assets will be dealt with upon the death of a cohabitee. Provision can be made by way of a will but the parties should always bear in mind that a claim can be made against the deceased’s estate under the Inheritance (Provision for Family and Dependants) Act 1975. As stated above, life insurance policies and pensions can be nominated to a surviving party.

Personal possessions: these can often be overlooked but thought should be given to who owns what and who will keep what in the event of separation. It may be that one party earns significantly more than the other so would be in a better position to purchase new household goods in the event of separation. Furthermore, one party may bring into the relationship a valuable asset so you should consider how this will be dealt with upon separation.

A cohabiting family should obtain independent legal advice. This means each party will need to see a separate solicitor. One party cannot advise two people on the implications of the terms of an agreement as it is likely there will be a conflict of interest due to a particular term benefitting one party as opposed to another (even if they are fair and reasonable).

Parties in a cohabiting relationship should exchange ‘financial disclosure’ (full details of their finances) to ensure that they are fully aware of the other parties’ financial circumstances. This will assist in drafting a comprehensive agreement.

If there are any children, provision should be made for them in the agreement.

The agreement should be reviewed regularly, particularly if a child is born or one party’s circumstances change, because, for example, they cease working or receive a large inheritance

Proper consideration should be given to whether the terms of the agreement are fair and are in line with the kind of order a court would make. The whole agreement may be deemed void if the outcome would be unjust: if, for example, a term dismisses either party’s claim for child maintenance

Yes, and as with financial remedy proceedings for married couples, consideration needs to be given to all the circumstances of the case, including whether undue pressure is being placed on either party by their partner or a third party such as a relative. If a court concludes that the agreement was entered because one party was placed under pressure, the whole agreement could be given little or no weight. Speak to a cohabitation lawyer from Stowe Family Law for advice on how to set up a cohabitation agreement with your cohabiting partner.