Cohabitation Agreements - Protection for Unmarried Couples

One of the most common myths in English law is that there is such a thing as a ‘common law marriage’. It simply doesn’t exist and this misapprehension has led the Law Commission to suggest proposals giving additional rights to cohabiting couples. However,  a proposed revision of the law appears to be many years away if it takes place at all. Currently, cohabitees will continue to have few rights. When a marriage or civil partnership breaks up or one partner dies, the rights of the respective partners are relatively clear. When the relationship of a couple who have been living together breaks up or one of them dies, the difference between a legally-recognised partnership and an informal one becomes all too obvious.

For example, in a case involving two barristers who had lived together, long and expensive court proceedings were necessary to decide the appropriate apportionment of the two properties they owned, both of which were held in the name of one partner.

On the death of an unmarried partner not only do the intestacy laws make no provision for the surviving partner to inherit from the estate of their partner, but also the surviving partner does not benefit from the exemption from Inheritance Tax that would apply if the deceased’s estate passed to a spouse or civil partner.

It should also be noted that the rules relating to passing on tenancies for social housing require that a tenancy will only be passed to a 'common-law' spouse if specific requiements regarding cohabitation are not met.

Indeed, in order to receive anything at all, the surviving partner may well have to go to court to show that they co-owned assets which in some cases may have been paid for by both partners but were owned in one name only. The surviving partner may also have to show that they qualify for financial provision to be made out of the estate under the Inheritance (Provision for Family and Dependants) Act 1975, which is designed to protect the dependants of people who die without leaving adequate financial provision for them. In any event, the surviving partner may face severe financial pressure whilst a claim is ongoing, even if it is ultimately successful. In 2014 the ambit of this legislation is being widened to remove remove anomalies which can unfairly limit access to support by some dependants.

For example, consider a case involving a woman who had lived with her alcoholic partner for nearly three decades before moving out, shortly before he died, because she feared for her safety. He left no will. Had they been married, the situation would have been simple. However, in this case the woman was forced to go to court to prove her entitlement to financial provision, which was resisted by her late partner’s family.

What Can be Done to Prevent Such Problems?

One easy and inexpensive solution is to make a cohabitation agreement. This is a contract, between two people who live together, which sets out their agreement on the division of their combined assets. It is sensible when cohabiting with anyone, without the protection afforded by marriage or civil partnership, to enter into a cohabitation agreement so that ‘who owns what’ is clear. This is not only important if a relationship breaks down, but also if one partner dies.

What Should the Agreement Contain?

Like any contract, it should state who it is between, how long it is intended to last and that it is intended to be legally binding. If there are assets (e.g. your home) which are to be dealt with in a particular way, these should be specifically mentioned and details provided as to how they are to be dealt with on death or on break-up of the relationship. It is not uncommon for a couple to sell one of their properties when they move in together, with the property they live in being retained in the name of the original purchaser. In such cases, it is sensible to decide if the non-owning cohabitant’s contribution is to be treated, for example, as a loan or if they are entitled to a percentage of the property value. It may also be sensible to include a clause that prohibits either cohabitant borrowing money on the security of the property without the informed consent of the other.

The ownership of all significant assets – bank accounts, insurances, specific valuables etc. – should be considered. Details of income and expense sharing arrangements should be included if possible and if there is the intention that one partner should support the other, this should also be mentioned, as should any financial arrangements regarding family members.

It is obvious that a cohabitation agreement is normally best considered in tandem with your will. There are tax planning and other issues to consider – for example, you might think about writing any death in service benefits or insurances in trust for your partner.

In the summer of 2013 a Private Member's Bill was introduced into Parliament with the intention of giving unmarried cohabitants rights similar to those of spouses on the break-up of a relationship The bill did not pass through Parliament, but the question remains a 'live issue' for the legislators.