If you live with your partner and you aren’t married, you might want to consider drawing up a Cohabitation Agreement together to ensure that your rights and finances are protected in the event you split up. To speak with one of our specialist lawyers call us on Freephone 0808 175 8000 or contact is online or contact us.
What is a Cohabitation Agreement?
Also known as a Living Together Agreement, a Cohabitation Agreement is a document that sets out what will happen to assets, finances and family if you and your partner should separate. It can cover everything from property rights and shared assets to custody of pets and care of children. It is designed to protect both people from unnecessary cost and legal issues, as well as unpleasant disagreements following a breakup.
A couple can even use such an agreement to help them manage their day-to-day finances right now. You can set out the amount that each person will contribute to household bills and mortgage or rent payments, as well as deciding on matters such as taking out life insurance policies. This can help you and your partner avoid arguments about money, and help you steer clear of financial difficulties in the future.
Why is it important?
People often think that couples who have been living together for a long period of time are ‘common law’ husbands and wives, but there is no such legal status in the UK. The law refers to 'living together' relationships as cohabitation, so people living together are called 'cohabitees'. What this means is that in case of separation, cohabiting couples don’t have the same rights and protections as people who are legally married.
In England and Wales, the law gives married couples who separate a legal right to maintenance and share of joint assets such as property. A court will take all of a couple’s circumstances and relationship history into account and decide what is the fairest way to divide their shared money and property.
If you aren’t married but you live together, these rights don’t apply. This is even the case if you have been living together for a long time or you have children. Should you separate, it will be up to you, your partner and your respective solicitors to untangle assets and finances. It can be hard to remember after many years together who owns what, so sorting everything out can be a complicated and time-consuming business. If you and your partner are no longer on the most civil terms, it’s less likely that rational and mutually beneficial decisions can be made. This could mean that the process takes longer, is more expensive and more stressful than it needs to be. Also, the outcome may not be ideal, especially compared to what it could have been if an agreement was drawn up when you and your partner were on good terms.
For some couples, not having an agreement in place can be more than inconvenient. It can cause some very serious issues. Consider this example: a person moves in with their partner, who owns the property they now live in together. Many years down the line, the couple separates in a less than amicable way. Without an agreement in place covering what happens to the property they live in but that one person legally owns, the other person could end up without anywhere to live and without any share in the property’s value.
For couples who live together, the best way to responsibly manage and protect shared finances is to draw up a Cohabitation Agreement. It may not seem the most romantic of prospects right now, but it can actually be a caring and responsible thing to do in the long term. Entering into this agreement together helps to ensure that both people are protected and benefit from a fair outcome should you ever separate. Consider it in the same way as you would an insurance policy. If the worst should happen and you do separate, no one will be left out of pocket. Once the agreement is made, both of you will feel happier and more secure after having made a responsible choice. Having this kind of open, mature discussion with your partner and putting a safety net in place can even strengthen your relationship.
What a Cohabitation Agreement covers
A carefully considered agreement can help to prevent post-separation disagreements and unnecessary litigation over a number of crucial issues, including:
Who has what legal share in a property
- How any family businesses will be managed
- How debts will be settled or dealt with
- How shared savings and other wealth will be split
- How the mortgage and other property costs will be paid
- Who will take responsibility for and financially support any children
- How any property acquired during the relationship will be owned
- What happens to your car(s)
- Who has custody of any family pets
- How adjustments to pension schemes will be made
- What temporary arrangements will be put in place while you sort out your separation.
An agreement can also set out what will happen to finances and family if one person dies.
Is a Cohabitation Agreement legally binding?
This kind of agreement is not legally binding on its own, but a court will usually follow the instructions and provisions it includes as long as the agreement is fair to both people. You can also write your agreement as a formal legal deed, which our family law solicitors here at Slater and Gordon can offer advice on and draw up for you. This will make it legally binding, and it can be especially useful when it comes to issues relating to ownership of property. It is important to remember that a court is also more likely to uphold a Cohabitation Agreement if you’ve sought legal advice when drawing it up.
When to make a Cohabitation Agreement
There is no time like the present when it comes to protecting your finances, but it’s usually a good time to start giving it some thought when you first move in with your partner or have children together. You may want to make one if you’ve recently decided that you don’t want to get married, or at least don’t want to get married for a good few years. However, a couple that has been together for decades can still benefit from entering into an agreement now.
It’s often the case that couples suddenly realise that they have different perceptions of the family finances, and what was agreed about ownership of property. The worst time to discover this misunderstanding is following a separation, so it’s a smart idea to start having the discussion now.
How an agreement is put together
To put together a Cohabitation Agreement, you should ideally have a checklist of items that you must include, as well as extra items you might like to cover. Essential information includes details of family finances, property ownership, debts and other financial products such as pensions and savings accounts. You should always remember to include details of children and arrangements for them should you separate from your partner. An agreement will need to be signed and dated before it can be finalised, with witnesses present for both signatures.
Before drawing up your agreement, you’ll need to gather the following information and make sure that it’s accurate:
- A realistic market value for your house and any other property. You don’t have to call in an estate agent to do a valuation, but you can if you want to
- The amount still owing on the mortgage, if you have one
- Details of property ownership, including who paid what for the house and what the legal ownership status of the house is
- What you both earn and owe, including details of any debts, pensions, shares, savings or other income
- Figures for the financial contribution each of you makes to the household, including bills and other costs
- Who owns which personal possessions, including cars, furniture, paintings and valuable items. You don’t need to catalogue everything in the house, only things that you know you may argue over later. As a rule, if you bought it with your own money, inherited it or were given it (even by your partner), then it belongs to you. You may however want to make a separate agreement about who should get what in the event that you split up, one that is perhaps based on the sentimental value of an item rather than who paid for it.
- Details of pensions, including whether either partner has a ‘death in service’ benefit as part of their plan that the other is nominated to receive.
This may seem like a lot of information, but it can save a lot of stress, time and confusion later on. One of the most important things to remember when putting a cohabitation agreement together is to keep things simple. You do need to be thorough and accurate when including all of the important details, but it can be nearly impossible to plan for every scenario or future change. You should focus on what’s important to you and your partner, and ensuring that everyone will be properly and fairly provided for in case of separation.
It’s also likely that you’ll both want to review and update your agreement at some point. After all, circumstances change. You may acquire new property, start a business together or something else may happen that isn’t covered in the original agreement. If this is the case, revising your Cohabitation Agreement is the right thing to do. It isn’t difficult either. Simply contact one of our expert family law solicitors here at Slater and Gordon to make the changes you need to, or chat through your new circumstances to get some professional advice on how to proceed.
Entering into an agreement with your partner may involve a lot of discussion. You’ll need to sit down together to discuss and agree each item on your list. For some couples with straightforward circumstances, it only takes a matter of minutes to agree on each item and to put a sound plan in place. Others may end up redrafting their plan a few times before finalising it, but this is fine if it means the final agreement works for everyone.
How we can help
The next stage of the process is where we can help to make things simpler. Slater and Gordon have the largest team of family lawyers in the country and can provide legal representation anywhere in England and Wales. Our Cohabitation Agreement solicitors can advise you on the cohabitation issues you should consider, where you stand legally and how a court would view your arrangements.
Please feel free to bring your checklist of items you’d like to include in your agreement, and talk through each one with a member of our expert team. Alternatively, you can start your Cohabitation Agreement fresh with us, without the need to do any planning or discussion beforehand. Our solicitors can provide a full, personalised service to make drawing up an agreement simpler, advising on what to include and the most effective way to ensure a fair outcome for everyone. Unless you’ve drawn up such an agreement before, it’s easy to miss important things out. We can make sure everything that matters is covered, all for your peace of mind.
No two relationships are ever the same, so your Cohabitation Agreement can be tailored to meet your individual needs and circumstances. Have something unusual you’d like to include, or is your situation more complicated than the average couple? We can find the right solution to suit you, and make sure that it is included in clear terms in your agreement.
For more information, read our online legal advice guide about Cohabitation Agreements, which you can also download and print.
If this sounds like the right solution for you and your partner, call our Cohabitation Agreement solicitors on freephone 0808 175 8000 or contact us online for expert advice and to start getting your personalised agreement together.
Slater and Gordon Lawyers is one of the UK's largest and well known law firms with offices in London, Manchester, Watford, Liverpool, Chester, Birmingham, Sheffield, Cardiff, Edinburgh, Cambridge, Milton Keynes, Preston, Wakefield and Wrexham.