Cohabitation Agreement- What’s mine is mine – isn’t it?
More and more couples are deciding to cohabitate rather than formalise their relationship through marriage or cohabitate prior to marriage. Many couples believe that cohabitation results in a “common law marriage”; this is a myth and the rights and obligations between married and unmarried couples do indeed differ. As these rights and obligations differ this can mean that several issues can arise for unmarried couples in relation to property ownership and financial matters upon separation. It is therefore important that you understand your rights and obligations should you decide to cohabitate.
The definition of being a cohabiting couple is broad; it usually and simply refers to parties who live together but haven’t entered into a civil partnership or marriage. It is often thought as being the period prior to marriage, but more frequently one is no longer leading to the other. Further, you do not have to be romantically involved, you can be a cohabitee with a friend or family member for example and the rights and obligations will be same as those cohabitees who are romantically involved.
Couples who are cohabiting have fewer rights and duties owing to one another than couples who have married. It is possible to agree a position as a cohabiting couple called a cohabitation agreement, much in the same way as parties may consider a pre-nuptial agreement prior to marrying. Whilst this would not be a legal contract and wouldn’t bind any subsequent Court proceedings, a cohabitation agreement can act as a guide; again, in the same way as a pre-nuptial agreement would.
Even with a cohabitation agreement in place should parties separate, dividing assets is more complicated than through ancillary relief proceedings associated with divorce. A parties’ assets such as pensions, investment properties or inheritance will not automatically be assumed into any settlement discussions to separate financially. In a case where the negotiation of the division of assets is not successful, the way forward will be by application to the court by way of an equity civil bill. These are expensive however and you will require receipt or proof of all the finances that you are claiming for. It is therefore important to consider at the outset what works for you and your partner and in the worst-case scenario whether your situation means you will be adequately protected.
A cohabitation agreement is a legal document between cohabitees which will set out who is responsible for bills, who owns which asset and how assets and liabilities should be split in the event that you separate. You can also include terms such as access to each other’s pensions and next of kin rights. You can make a cohabitation at any time and couples may wish to enter into one later in the period of cohabitation if they purchase a property or start a family. Cohabitation agreements can also be amended should your circumstances change after entering into the agreement.
At our initial meeting we will advise on the costs and timeframe and what can and cannot be included in a cohabitation agreement and what paperwork will be required. We will ask you about your assets, pensions, property, property ownership, tenancy information, earnings, and information in relation to any children. We will also ask that you have a discussion with your cohabitee to look at your assets and decide how you would like them to be divided. Once you have had this discussion, we will have another meeting with you and begin to draft the cohabitation agreement. To best protect all parties’ interests, we recommend that you each have separate legal representation.
One last thing to consider is making a Will. When a married person dies without a valid will, their estate will pass to their spouse. This is not the case for unmarried couples. We would therefore advise that you also make a will.