According to statistics, more couples are choosing to cohabit rather than marry. If you are considering cohabitation or are already living with a partner, it may be worth you entering into a cohabitation agreement in order to assist in the future should any disputes arise, especially as the law for cohabiting couples is different to that for married couples should you split up.
What is a Cohabitation Agreement?
Cohabitation, in law, refers to when a couple lives together but are not married.
Cohabitation agreements are contracts that are entered into by the parties. It is not only advisable for couples but any persons who live together, romantically or otherwise.
The legal rights of a cohabiting couple upon relationship breakdown are very different to those who are married. For example, one cohabitee cannot claim a share of the other’s pension or ask the other for maintenance to assist with their own costs of living – only for those of a child of the family – whereas a spouse is entitled to make such claims.
Because of this, at Hawkins Family Law we always recommend cohabitation agreements in order to clearly define how the assets are held and what will happen should the relationship not work out.
When to make a Cohabitation Agreement
Cohabitation agreements should be considered whenever a couple are contemplating moving in together. They can be drafted beforehand but should be signed after the couple have begun living together to avoid potential problems.
It is also a good idea for a couple to enter into a cohabitation agreement, or indeed update an existing cohabitation agreement if their circumstances are soon to change, such as if they are expecting a child or jointly purchasing a home.
What can a Cohabitation Agreement cover?
Good cohabitation agreements will clearly set out how the couple’s finances are managed whilst together and what would happen if the relationship were to break down. It will detail all the assets including jointly-owned property, cars or a business etc. It will often set out who pays the bills/mortgage and who covers expenses such as repairs to the family home. On separation, the agreement might set out that one party can buy the other out of the property or will pay the mortgage until the property is sold etc. It could even set out who should keep the family pet.
Cohabitation agreements should contain nothing of a personal matter such as who does the washing up. It can, however, cover proposed arrangements for children.
Is a Cohabitation Agreement legally binding?
Cohabitation agreements are a legal contract which can be enforced in the Courts. If, however, you end up making an application to the Court, for example, under the Trusts of Land and Appointment of Trustees Act (ToLATA) or under the Children Act, then a Judge is not bound by a cohabitation agreement within the context of those applications. He or she will have discretion as to whether to apply the terms agreed.
If we get married will a Cohabitation Agreement be binding on divorce?
If you decide to get married following a cohabitation agreement and unfortunately the marriage breaks down, an earlier cohabitation agreement is unlikely to be followed.
What will a Cohabitation Agreement cost?
The cost of drawing up cohabitation agreements will vary depending upon the complexity of the terms and assets involved.
What information do you need?
Full disclosure as to each party’s assets and income should be provided. This means getting together documentary evidence of investments, savings, pensions, mortgage/bank statements, detail of earnings and other documents as applicable.
Do cohabiting couples have the same rights as married people?
If a cohabiting couple splits up, they do not have the same legal rights to property as a married couple. In general, unmarried couples cannot claim ownership of each other’s property in the event of a breakup. Sometimes trusts can be formed between cohabiting partners, either as a result of explicit promises, documents or inferred promises and a course of dealing. Trusts are a complex area of the law, we suggest legal advice is sought early on if you think there may be a trust.
What happens to the house if we separate?
The family home may often be one of the main assets for couples who live together. Both parties will understandably be concerned about where they will live, and arguments about the house are not uncommon.
The law is quite clear that where the property is jointly owned (i.e. held by the two parties in joint names) each of them is permitted to enter that property without conditions. This is the case even if one of them has moved out following their separation. The only time this would change would be if there was an order of the Court preventing one party from entering the house (an injunction).
As a courtesy the person who has moved out should let their ex-partner know of any plans to return to the house – for example to collect personal belongings – rather than to turn up unannounced as this can raise the temperature. If one of them feels harassed or intimidated by the other as a result of gaining entry to the property, there are measures that the court can take to prevent that person returning to the property, irrespective of their legal ownership. Anyone that finds themselves in this position should take legal advice.
Often people ask what happens if I change the locks? Lock changes do not override a right to enter. If a house is in joint names changing the locks may not have the desired effect. A spouse who is locked out of his or her jointly-owned home will not face a conviction for criminal damage should they then ‘break in’ in order to gain access. Any person who has been prevented from accessing their property as a result of their ex-partner having changed the locks should take legal advice before taking matters into their own hands.
Another point to remember is the mortgage. If the mortgage is in joint names, then each person is fully responsible for that liability and payment in full. Contrary to popular belief, it is not a case of each person only having to pay a 50% share. If one person fails to pay, then the other will need to take steps to ensure that the full instalment is paid to avoid mortgage arrears. This is known as ‘joint and several liability’. However, there needs to be a sensible and practical solution in the event that a couple separates. You should try to agree an arrangement between you to ensure that the mortgage continues to be paid if one of you moves out. Every situation is different, and the best solutions are usually found with the assistance of experienced family lawyers, which are able to advise on the best solution for their clients. Cohabitation agreements can regularise what should happen with the house and payment of the bills when you separate.
What happens to my pension if I am cohabiting?
When a couple gets divorced the starting point is the assumption that their assets should be divided between them equally, although there are factors which can and often do justify departing from equality in favour of one party. Pensions that have been accrued during a marriage or civil partnership by either party are matrimonial assets and available for division between the spouses. Pensions accrued before marriage may still need to be taken into account if needs dictate. That said, dividing a pension will not be as straight forward as dividing other assets such as money in the bank, investments or property.
If you agree a legally binding cohabitation agreement, then whilst you cannot ask the Court to make a pension sharing order you can take into account the pension in terms of perhaps a lump sum to offset your agreed share. Unfortunately, it is not possible to create what is called a pension credit in the name of the none pension holder in the same way that it is on divorce.
How will joint savings and bank accounts be divided?
Properly drafted cohabitation agreements can set out what you have agreed about joint savings and bank accounts and how they should be divided at the point of separation. If it is silent or you do not have an agreement in place, then each of you are entitled to equal access to the funds in the account irrespective of who paid the money into the account. One party could therefore take all the money out of the joint accounts.
How do I look after my children's financial interests?
Any money held in a child’s name belongs to the child. If it is held in an investment or bank account on trust for a child, then it does not belong to the trustee; they are there to look after it for the child and do not own the funds or asset.
What about child maintenance?
If you and your partner have children, then you are both expected to contribute financially towards their costs. There are various ways you can do this and who pays who depends upon where the children live, and who earns what. You can agree a payment plan between yourselves. Ideally check it against the Child Maintenance calculator at www.gov.uk/calculate-child-maintenance. In a cohabitation agreement you can detail how you want this to be dealt with when the funds should be paid and to who and for what, for example for holidays, direct to the child, etc.
If you cannot agree then either one of you can go to the Child Maintenance Service. Child maintenance is generally paid until your child is 16 or until they are 20 if they are in full time education completing A levels, Highers or Equivalent. Thereafter it is possible to make an application to the Court if it is justifiable.
Just because you have a cohabitation agreement that covers child maintenance does not mean that you or your partner cannot go to the Child Maintenance Service. However often if you have thought about child maintenance in advance then this becomes less likely.
For more information or to discuss cohabitation agreements further, please contact us.
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