When unmarried couples separate they are not afforded the same protection in law as married couples who are getting divorced. In this article, we guide you through the Common Law Myth and how cohabiting couples can protect their interests by putting in place a Cohabitation Agreement.
What is the Common Law Myth?
It is a common misconception that if you have been living together for a long time you automatically have the same legal rights over finances and property after you break up as if you'd been married. This concept is often referred to as “common law marriage” and sadly has no legal validity.
Moving in with a partner does not automatically give you the right to claim against each other’s property or possessions, irrespective of the length of the relationship or whether you have any children.
Cohabiting couples have no legal duty to support each other financially, and there is no automatic share of ownership of possessions, savings, investments or debts.
What if we share ownership of property?
If you own a property in joint names, with both names are on the title deed, you will need to decide whether one of you will remain in the property upon separation, or if the property should be sold.
Owning a property in joint names can help protect the rights of both partners. There are two forms of ownership:
- Joint Tenants – it is presumed that the partner’s intend to own the property in equal shares. In the event one partner dies the property will pass automatically to the other.
- Tenants in Common – the partners can own equal or unequal shares. For instance if one partner contributed more towards the purchase price. If this the case, the ownership agreement will be contained in a Declaration of Trust. If one partner dies the property passes in accordance with their Will or intestacy rules. Cohabiting couples have no automatic right to inherit if their partner dies, although they may be a beneficiary under the other’s Will. There is no inheritance tax exemption for unmarried couples.
If the property is owned by one partner there are certain circumstances where, upon separation, the non-owner can argue that they are entitled to what is known as a “beneficial interest”. Usually this is because of financial contributions such as renovation works being paid, either in part or in full, by the non-owning partner. It is up to the non-owning partner to evidence that they are entitled to a beneficial interest.
Should we have a Cohabitation Agreement?
Cohabitation Agreements can be entered into by unmarried couples wishing to put in place an agreement, recording their respective contributions and entitlements in a legally binding document. Such agreements should clearly evidence the intention of both parties, so that they are fully aware of what will happen if the relationship breaks down, or one cohabitee dies.
Setting aside time to consider the details of a possible separation, or death, is difficult. However a Cohabitation Agreement can provide much needed clarity and prevent potential areas of conflict.
For instance, a Cohabitation Agreement can set out how much each partner will pay into a joint bank account, and how ownership of items purchased using that money will be shared. It can also protect against claims being made in respect of inheritance received by one partner. A Cohabitation Agreement can address any property owned by one or both partners, detailing contributions each partner will make and what share of the property they will be entitled to.
Find out more
At Tozers we prepare tailored Cohabitation Agreements unique to you. It is always advisable to review your Cohabitation Agreement and ensure it is updated so when circumstances change it continues to reflect your current wishes.