What happens when you decide to separate?
Separating cohabitating couples will find themselves in a different situation compared to those who are married or who have drawn up a legal agreement. Contrary to popular belief, unmarried couples do not have the same rights as married couples, which means if they separate they can find themselves in a complicated legal ‘tug-of-war’.
Your legal rights will vary depending on the legal stance of your relationship. Anyone making the emotional commitment to living together rather than the legal agreement of marriage, will not receive the same entitlements as married couples. Unlike civil partners or spouses, whereby the Courts have wide powers to redistribute property irrespective of which whether it is owned by one or 2 of the spouses, there is currently no law that states that a partner (long term or short term) has a legal entitlement to get anything in the event of a breakup.
The importance of a cohabitation agreement
While a cohabitation agreement may not sound like a romantic proposal, it is an option for anyone who doesn’t want to walk down the aisle or make a legal commitment. Similar to a pre-nuptial agreement, a cohabitation agreement will come into play in the event of a partnership breaking down and works just like an insurance policy does. While you may not be planning to separate, an agreement will protect your rights and make sure that there is clarity on what happens to assets in the event you separate.
Many couples will eventually come to a point in their relationship when the time comes to choose which house they should live in. If you decide to move into your partner’s home with whom you are not married to, they will still legally own the house and its content in the event of a split. Even if you contribute to bills, paying for extensions or renovations you will probably not have any legal entitlement to the property. Even where you may have an entitlement to a share of the property, the cost of court proceedings may mean it is not worth pursuing.
What a cohabitation agreement does
This agreement will outline the obligations and rights of both people in the relationship and this can pertain to anything from the ownership of the property through to its contents.
Solicitor David Kirkman, who specialises in family law, comments that “cohabitation agreements are becoming more popular. If you want protection and certainty if you are to separate, a cohabitation agreement is a great investment”.
Therefore a cohabitation agreement is essential as it ensures that there is a legal plan in place is the best way to protect yourself from a lot of unnecessary legal turmoil. A cohabitation agreement should be written up while you are happy as a couple, just as a prenuptial agreement would be made between a bride and groom who are preparing to walk down the aisle.
In addition to this a cohabitation agreement can also be used to organise the day to day finances of the household while you live together, such as how much each partner contributes to rent, mortgage or bills. It can also indicate whether a life insurance policy can be taken out on one-another.
How is the agreement put together?
Cohabitation agreements are relatively easy to put together, and require only a short few steps. This agreement is legally binding as long is at is drawn up by a qualified legal representative and both parties have signed it using independent legal advice.
- Firstly, each member of the couple must decide who owns what and how their assets would be divided in the eventuality of a split
- Each partner should then decide exactly what they want from the agreement. For example; equal bill splits or one partner paying slightly more on one item such as a car to ensure sole ownership. This can be done together, or separately through each other’s legal representatives and then compromises agreed upon.
- Once this has happened, one partner pays their lawyer to draw up the agreement, and forward to the other partner who gets their legal representative to go through it.
- Finally, when both parties are satisfied with the agreement it is signed and witnessed by each partner.
- The document is now legally binding.
This process can get quite expensive, with the average price between £2500 & £3000. This includes the drafting of the article and signatures from both sites. It can be done cheaper such as using online forms. However for guaranteed future protection it is always better to go through a qualified legal representative.
Each cohabitation agreement can be tailored to meet the individual needs of each couple. However there are several basic requirements that need to be written into the cohabitation agreement to make it official.
- Details for each person in the couple, including names, addresses, and ages along with any other personal details deemed to be important.
- Whether the cohabitants want the agreement to be legally binding. – This step is important as there is technically no law regarding cohabiting rights. Therefore by stating you intend the agreement to be legally binding your cohabitation agreement becomes protected under contract law.
- Details and arrangements regarding children. Current or future. This could range from anything such as who pays most general maintenance, to which type of education the child will receive.
- Expenditure of the household – It should be accurately detailed who is responsible for which bills and how much each party contributes. This needs to be broken down as much as possible, and can even include food shopping and other miscellaneous household expenditure. It is also important to include whether this would come from personal or joint bank accounts.
- Termination Provisions: These describe exactly what will happen in the event of a split, and how everything will be dealt with when both parties decide to end the agreement.
There are also several other additional clauses that could be included in your cohabitation agreement if you wanted to ensure that it was extremely thorough and each eventually was covered. These are details such as;
- How will any joint accounts and credit cards be operated?
- How will home repairs and improvements be agreed & funded?
- In which circumstances will the home be sold
In reality, any clauses that is jointly agreed upon by each party can be added to the cohabitation agreement. So it is important each member of the couple takes their times and discusses and explores everything they may or may not want to be formally written into the cohabitation agreement.
At what time should you revise your cohabitation agreement?
Obviously as time goes by circumstances and relationships change and develop, so things you agreed on previously may no longer be as applicable to your relationship in its current state. If this happens it may be smart to revise your cohabitation agreement to ensure that it reflects the dynamic of your relationship at that time. Examples of times when you should revise your agreements are times such as;
- If one partner becomes seriously ill or disabled
- If one partner loses their employment or gets made redundant.
- If there is a significant shift in the contributions each partner males to either the home, or the relationship as a whole.
- One partner receives a large inheritance. Either monetary or in assets.
- The birth of a child
It is important to note. That if it is decided that the couple want to marry each other or enter a civil partnership, the cohabitation agreement will not be formally recognised as acting as a prenuptial agreements. It is possible to create a prenuptial agreement using the same clauses as your cohabitation agreements. However one of the parties’ legal representatives will have to redraw as an official prenuptial agreement and then have it signed and witnessed by both parties.
Other documents that could be useful for a cohabiting couple.
If you are entering into a cohabitation agreement with your partner it may also be wise to enter into other legally binding documents to ensure that you are both able to provide for each other in case the worst does happen.
One way to do this is through lasting power of attorney, whereby one partner is able to make decisions about the other partners finances and/or personal welfare in the event that one partner suffers an accident or otherwise become unable to do so themselves. In addition to this, it could also be a smart decision to include your partner in your Will.