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Cohabitation agreement: why this is essential for non-married couples

by Tracey Heath

Published on 10th October 2019

What is a cohabitation agreement and why is it important? As specialist conveyancing solicitors, we are often asked by people moving in together, who are unmarried, how to make their position legally secure.

Theirs is an important question.

People setting up home together who are married, or in a civil partnership, have certain automatic protections. In England and Wales, when married couples divorce or civil partners break up (known as dissolution), both parties have a legal right to maintenance and their share of assets, including property and inherited property.

Cohabiting couples have no such rights, regardless of the number of years they have been together and whether they have children.

The most recent figures from the Office for National Statistics show that the marriage rate is at an historic low.

At the same time, the number of unmarried couples has doubled since the mid 1990s. Also, there has been a significant rise in the number of children living with unmarried parents, or with parents who are not in a civil partnership.

Interestingly, a large proportion of those who cohabit believe they have the same protection as people who are married or in a civil partnership. However, this is not the case: English law does not recognise the status of common-law spouse or partner.

If an unmarried couple part, the result can be – indeed, often is – costly and lengthy legal disputes.

What is a cohabitation agreement?

A cohabitation agreement is a document that sets out how property and assets are to be divided in the event of a relationship breakdown. They can go into great detail, and cover not just the property itself but the contents, all personal assets and savings.

If there are children, the cohabitation agreement will also detail how they are to be supported and by whom.

The agreement can also cover how the household expenses are to be covered, and by whom, on a day-to-day basis.

It may sound a little unromantic, but this document will be vital should there be a breakdown in the relationship.

As lawyers, we can draw up this agreement on behalf of the couple, and it must then be signed and witnessed. As a legally binding document, it is very important that both parties are happy and in full agreement with its contents.

What is a Declaration of Trust?

A Declaration of Trust focuses on the financial arrangements between those who jointly own a property.

We’ve talked about cohabiting couples, but a Declaration of Trust relates only to property and applies to all those who are joint owners; they don’t have to be living there. This may be parents who are investing in a property with their children, for example.

The document is drawn up at the time of buying a property, and sets out exactly who is entitled to what in the event that the property is sold, or that one person wants to be bought out, or if another wants to own it outright.

As with a cohabitation agreement, a Declaration of Trust is legally binding and its aim is to remove uncertainty and avoid disagreements arising.

What does a Declaration of Trust include?

This will depend on the individual circumstances, but typically a Declaration of Trust can include:

  • How much each person contributes to the deposit, and how much will be repaid
  • What percentage of the property each person will own, and how the money will be split should the property be sold
  • How much each person will pay towards the mortgage, and how the mortgage will be paid off.

Should cohabiting couples make a will?

Yes, is the short answer. The cohabitation agreement and Declaration of Trust will only protect their rights when they are alive.

If one partner dies, and has left no will – in other words, dies intestate – then the surviving partner has no legal rights. Unlike those who are married or in a civil partnership, the law does not recognise cohabiting couples.

The only way to ensure your partner inherits your estate, if you are cohabiting, is to make a will.

At Optimum, our legal team specialise in wills, probate and property law. This means if you are planning to cohabit we can help you with the legalities of the house purchase, advise you on a cohabitation agreement and Declaration of Trust, and draw up your will.

For more help and advice, please get in touch.

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