What is a Cohabitation Agreement?
A Cohabitation Agreement is an agreement for unmarried partners that sets out who owns what and in what proportion. It records how you will split your property, its contents, personal belongings, savings and other assets should the relationship break down.
It can cover how you will support your children, over and above any legal requirement to maintain them, as well as how you would deal with bank accounts, debts, and joint purchases such as a car.
The Agreement can also be used to clarify how co-habiting couples will mange day to day finances whilst they are together.
Litigation is costly, time consuming and emotionally challenging. Here at Creighton & Partners we encourage co-habitees to take a pro-active approach by considering whether entering into a Co-Habitation Agreements in order to avoid future litigation is right for them.
The laws are not the same as those for married couples. Persons living together have no special rights or duties in relation to each other, even if they have lived together for a number of years.
Each person takes out of the relationship the property which they have brought into the relationship. Money/assets acquired during the relationship generally belong to the person responsible for acquiring them and are only shared if there is a clear agreement or evidence of intention to do so.
To protect themselves both parties should take advice at the beginning of their relationship and consider entering into a Cohabitation Agreement. The Agreement will ensure that both parties are aware of their entitlement should the relationship breakdown.
1. Buying property together/Live in a property owned by one of you.
The home is often the most valuable asset of the relationship. A couple should give careful consideration to whether they wish to purchase the home as “joint tenants”,“tenants in common”or in one party’s sole name.
Joint tenants: upon separation, each person takes half of the equity in the home and if one of them dies, the survivor inherits the whole property.
Tenants in common: the property is held jointly, but as separate shares, upon death their share will not automatically pass to the other person. Where there are unequal contributions, it is prudent to set out the division of the equity in a Declaration of Trust agreement.
Where ownership of the family home is in the sole name of one person, it is usually a sensible precaution to enter into a written Agreement to define and secure the financial interest of the non-owner who otherwise could be entitled to nothing. The non-owner cannot claim a share of the property simply because they have been living there for a long time. In the absence of such an Agreement, the non- owner will need to establish an interest in the property through conduct or financial contributions.
2. If you have children.
Depending on the circumstances, one parent may be able to claim maintenance, a lump sum or property rights against the other, on behalf of a child. The parent who is not living with the child may be required to pay child maintenance via the Child Maintenance Service, unless maintenance can be agreed. A Co-habitation Agreement can be used to record the parties’ financial obligations and intentions towards children in the event of the breakdown of the relationship.
3. If you hold pensions.
Occupational pension schemes often do not recognise partners who live together and may only allow a survivor’s pension to be paid to a surviving unmarried partner if the survivor was financially dependent on the pension scheme member. Cohabiting partners have no rights under the state pension system. A specific nomination of the other party may be required to benefit from the private/occupational policy.
For further information please view our video, download our guide or contact one of our solicitors.