As Liz Hurley and Arun Nayar begin married life together, recent statistics have revealed that the institution of marriage could be in crisis. In 1971 some 68% of the population was married; by 2001 that had fallen to 54% and it is projected that by 2031 this figure will fall to 41%. The government’s reaction to these statistics has been surprising slow. On 31 May 2006, the Law Commission published its Consultation paper, “Cohabitation: the financial consequences of relationship breakdown”. The preliminary observations made by the Law Commission in the paper are:
- The existence of a cohabiting relationship should enable some, but not all, couples to make financial claims on separation;
- The availability of new remedies would be controlled by certain “eligibility tests” such as having a child (in which case a party should be automatically eligible to apply) or having lived together for a certain period of time.
- In satisfying the eligibility test the applicant would then need to demonstrate various factors including the degree of mutual commitment to a shared life.
Despite these observations it is unlikely that any new legislation for cohabiting couples will be in place until 2008 or later. The Law Commission in its paper takes every opportunity to point out that it does not contain any final recommendations for the reform of the law!
So what can be done now???
As the current law offers little protection for cohabiting couples, more and more couples are deciding to create their own formal legal framework to regulate the legal and financial obligations within their relationship. This is done by entering into a Cohabitation Contract, sometimes called a Living-Together Agreement. The main advantage of entering into a Cohabitation Contract is that it provides a couple with certainty and clarity as regards their financial commitments for relatively little cost. In most cases a Cohabitation Contract can be prepared for approximately £500.00.
Although a Court can challenge the enforceability of a Cohabitation Contract, there are certain steps that can be taken to minimize a challenge against enforceability. These are as follows:
- Ensure that both parties have independent legal advice;
- Ensure that full and frank disclosure has taken place;
- It is helpful to include a certificate in the Contract signed by each solicitor confirming that they have advised their client of the effect of the Contract and that the parties intend to create legal relations;
- Nothing should be included in the Contract that could be contrary to public policy;
- The Cohabitation Contract should be in the form of a Deed.
Matters that can be included in a Cohabitation Contract include:
- Housing and other property;
- Financial support after separation for both a former partner and children;
- Joint bank accounts and credit cards;
- Other personal property.
As the number of marriages in England and Wales has fallen from 415,000 to around 270,000, it is likely that Cohabs will become the new PreNups.
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