Cohabitation is now the fastest growing type of family with approximately 3.6 million couples currently living together in the United Kingdom. The number of couples choosing to live together (cohabit) in a stable intimate relationship, without getting married or entering a civil partnership, in what some people refer to as “a common law marriage”, increased by 144% between 1996 and 2021. If an unmarried couple want legal protection, they either need to get married, become civil partners, or enter into a Cohabitation Agreement to protect their interests.
Despite popular belief, common law partner or common law marriage is not legally recognised, regardless of how long a couple has lived together. Couples who live together without being married or in a civil partnership are legally referred to as “cohabitants” or “cohabitees”. They have very limited legal rights compared to married couples or those in civil partnerships especially in terms of financial claims if the relationship ends. In general terms the current law treats cohabitees as two unrelated individuals.
If you cohabit rather than get married or enter a civil partnership you have:
- no automatic rights to your partner’s property in the event of their death.
- no automatic entitlement to inherit their estate, even if you have children.
- no tax reliefs or exemptions that spouses and civil partners enjoy, including pensions.
Basically, neither party in a cohabiting relationship is entitled to any financial support or a share in the other’s assets if the relationship ends.
What is a Cohabitation Agreement?
A Cohabitation Agreement (sometimes called a Living Together agreement) is a legal document between unmarried couples (whether as an opposite or same sex couple) who are living together. It can confirm the ownership of existing assets (including property), define the financial responsibilities that each party will have to the other, and specify how savings and jointly owned assets will be distributed should the relationship break down.
An agreement encourages a couple to think about fair ways to organise their finances and what will happen if their relationship ends. Making an agreement is not an admission that you think your relationship will fail, but simply a contingency plan for the future.
Who can enter into an Agreement?
Any opposite or same sex couples who are not married or civil partners can enter into an agreement. It is recommended for those who already live together or intend to cohabit, and do not wish to get married or enter into a civil partnership.
When should a couple enter into a Cohabitation Agreement?
It is never the wrong time to make an agreement. Couples often enter into an Agreement when one of the following events occurs:
- When they decide to move in together.
- When they decide to have children.
- When they purchase a property together, or make other substantial investments.
- Get a mortgage together.
- Experience a significant life event such as illness, unemployment, or receiving an inheritance.
- After a previous divorce or dissolution of a civil partnership and receipt of a financial settlement.
- When one or both parties have substantial assets.
- When one party has debts going into the relationship.
- When combining finances such as when a couple decide to open joint bank accounts, share expenses, or make major purchases together.
- If the couple is launching or running a business together, a Cohabitation Agreement can outline how the business assets and responsibilities will be handled in case of the romantic relationship ending.
- If a couple plan to get a pet together.
What should a Cohabitation Agreement include?
An agreement can specify living arrangement and can include a wide range of provisions related to financial and property matters, such as:
- Ownership of property, and how it will be divided in the event of a split.
- Record the payment of any deposit on your home.
- What share of the mortgage or rent you will pay?
- How household bills will be dealt with.
- Bank accounts and money.
- Life insurance.
- Pensions.
- Assets such as cars, furniture, other property, jewellery.
- Payment of debts.
- Pets.
- Next of kin rights
- Outline a process for resolving any disputes that may arise between the parties.
- Set out the circumstances under which the agreement will terminate, such as marriage, civil partnership, or the end of cohabitation.
It is important to note that an agreement must be fair and reasonable to both parties.
Can an agreement be modified after it is created?
Yes, a Cohabitation Agreement can be modified once it has been created. It is advised that you keep it updated as your relationship changes or if anything significant happens in your relationship. Key reasons may include the following:
- The birth of children
- When one party becomes seriously ill.
- When one party becomes disabled.
- Redundancy or loss of employment.
- An event that significantly changes either party’s financial circumstances.
- Receipt of a large sum of money or inheritance.
- Plans on getting married or entering a civil partnership.
It is important to note that Cohabitation agreements become invalid if the couple gets married.
What are the benefits of a Cohabitation Agreement?
A Cohabitation Agreement can provide peace of mind in your relationship. It can help to avoid the kind of arguments and minor worries that can build up over time or that might cause difficulties in the future. By reaching an agreement before or whilst you are living together, you will:
- have a clear understanding of what your financial commitments are.
- avoid misunderstandings regarding your rights and responsibilities as you continue to live together, with regards to ownership of property
- avoid difficulties and disagreements if you split up.
- have clear evidence of your intentions should a dispute ever arise.
- An agreement can also be useful if one of you becomes seriously ill or dies. It will protect you both, and any other family members who will be affected.
For example, an agreement can make sure you have:
- a share of each other’s assets
- access to each other’s state pension
- next of kin rights in a medical emergency
Is a Cohabitation Agreement legally binding in the UK?
Cohabitation Agreements are legally binding when executed correctly. They should be properly drafted to ensure the agreement is clear and unambiguous, and signed by both parties as a Deed.
Both parties must also be honest about their finances by providing full and frank disclosure at the time of entering the agreement.
If all these conditions are met, Courts typically uphold and enforce agreements, ensuring that the terms outlined within them are legally recognised and followed.
Frequently asked questions about Cohabitation Agreements
What is a Lovers contract?
A Lovers contract is just another name for a Cohabitation Agreement or Living Together Agreement. The main aim is to provide each person with legal protection by establishing clear terms about financial matters in the event the relationship ends.
A Lovers contract can be made when a couple decide to move in together, or at any point after – even many years later.
How much does an Agreement cost?
As specialists in divorce and family law with backgrounds as Solicitors, Mediators and Collaborative Lawyers we offer couples fixed cost services and focused approached solutions to meet your objectives.
Can I make a claim on my cohabitees pension?
Generally speaking, unmarried couples do not have any right to benefit from their partner’s pension, unless they are formally named as a “nominated beneficiary”. Although in respect of the Local Government Pension Scheme, there is currently an exception to this rule.
What evidence do I need to prove cohabitation?
The existence of an Agreement signed by both parties is sufficient proof of cohabitation and the terms of your living together.
What is my girlfriend entitled to if we split?
In general, unmarried couples do not have the same legal rights to property as married couples. If the property is owned outright by one party, the other partner may not have an automatic right to any share of the equity.
To claim an interest in a property owned by one party it is necessary to show evidence of a beneficial interest in the property, such as contributions to the mortgage or home improvements.
If the couple jointly owns the home, they will be entitled to continue living in the property after the split, until the property is sold. The net equity will then be split depending on how the property is jointly held.
Can an agreement cover inheritance and Wills?
While an agreement can address some aspects related to inheritance, it does not fully replace the need for documents like Wills. For cohabiting couples, having a valid Will is crucial as it allow a person to specify how they want their assets distributed after death. It adds an extra layer of certainty.