The New Year inspires many of us to make changes in our lives. And although it may seem like a natural, fluid part of moving forward in a relationship, moving in together is a massive commitment.
Deciding to cohabitate (the very unromantic-sounding legal term for living together) is a logical next step for many 21st century couples. Unfortunately, unlike many other countries, UK law has yet to ‘cotton-on’ to the fact that for some, although they want to be committed to someone for life, they don’t need or want a marriage certificate to prove their devotion. Therefore, contrary to popular (and some say, perfectly logical) belief, even for a couple who have been living together for decades, their relationship has no legal protection.
That’s right – in such a situation, should one partner suffer an accident or become seriously ill, the other party to the relationship is not legally considered their ‘next-of-kin’ and therefore has no right to make any decisions on their behalf. They may even be denied information about their loved one’s health. And should one partner die intestate (without a valid Will), the surviving partner is not legally entitled to inherit any of the deceased’s property.
There is no such thing as a ‘common-law spouse’ in English law. So if you are planning to set-up home with your partner in the New Year, the best way to protect both your interests is to enter into a Cohabitation Agreement.
What is a Cohabitation Agreement?
A Cohabitation Agreement is an agreement which allows couples to regulate their financial affairs, not only while living together, but also if they separate.
In the past, Cohabitation Agreements were declared void for public policy reasons, i.e. it was not considered in the public good to promote ‘living in sin’. Thankfully, we have moved on, and it is now recognised that cohabiting couples are the fasted growing family type in the UK. As such, if a Cohabitation Agreement is entered into without any undue influence, the courts will recognise it.
How do I prove a Cohabitation Agreement is entered into freely, without any undue influence?
To prevent your Cohabitation Agreement being challenged on the grounds that one party unduly influenced another to sign it, it is imperative that both parties to the agreement:
- enter into it freely and voluntarily
- seek independent legal advice on the terms of the agreement
- provide full and frank financial disclosure
The agreement should be formally recorded in writing to avoid disputes about the terms, and to satisfy the requirements of the Law of Property Act 1925 where there is a declaration of a property interest.
What can be included in a Cohabitation Agreement?
A clear, concise Cohabitation Agreement can be used to set out the following:
- What each partner is bringing into the relationship, i.e. assets and debts held by each party
- If you separate, how property and assets will be divided. This should include property owned by you jointly and in sole names, money held in bank accounts, pensions, household items and vehicles, any gifts or inheritances received.
- How future major purchases will be paid for and divided if the relationship ends.
- How you intend to split the payment of bills, e. rent, food, utilities etc.
- If you have pets, who will get custody of them should you separate.
- Child maintenance payments – this will not, however, prevent an application being made for child support under the Child Support Act 1991, in the event of a future dispute.
- Any event that will terminate the agreement.
- A review or variation clause which can be triggered if a major event occurs, such as having a child together.
The Cohabitation Agreement should also include a ‘severability clause’ which stops one unenforceable clause rendering the whole agreement invalid.
What is a Declaration of Trust?
One of the most common causes of dispute (and distress) when a cohabiting couple separate occurs when only one party’s name appears on the title of the home they have lived in, which in turn denies the other party any rights to it.
If you and your partner do move into a home that you have purchased in your sole name, you must make it clear in the Cohabitation Agreement that your partner has no rights to the property upon separation. This can be done by including a Declaration of Trusts which states that your partner has no interest in your pre-acquired property. Except in cases where there is a reason for the courts to set the Declaration of Trust aside, i.e. a mistake, fraud or misrepresentation, a Declaration of Trust will normally be upheld should the non-owning party attempt to claim they have a right to a share in the property through a constructive or resulting trust.
Choosing to commit your lives together and cohabitate is a big decision for any couple. You may feel you wish to share everything with the person that you are in love with, but unfortunately, such generosity does not tend to apply when a couple split up, and a dispute develops over who gets what. Having a well-drafted Cohabitation Agreement in place can save an enormous amount of emotional distress, not to mention money being spent on legal fees (which can be astronomical if the dispute reaches court).
One final thing – if you move in together, make sure you draft a Will. This can save your loved one the stress of being left with nothing should you die intestate.
Nalders Solicitors has a dedicated family law team who can provide legal advice on creating a Cohabitation Agreement. To speak to us, please phone our Truro office on 01872 241414.