Cohabitation Agreements

What are the benefits of a cohabitation agreement?

The term ‘common-law husband/wife’ is frequently used to describe couples who live together; yet this relationship does not have legal recognition. For example, upon the death of one party the other is not recognised as next of kin, therefore would have to go to court to claim any of the estate left. In other words, interest of property and assets owned by the deceased would not be automatically inherited.

The creation of a ‘Cohabitation Agreement’, can remove some of the uncertainties of these rights, upon the end of the relationship. It is sensible to create a cohabitation agreement in order to record your intentions on how you wish your assets to be shared/divided. The agreement means both parties will be aware of their rights and obligations towards each other; helping to prevent post-separation disagreement, and unnecessary need for litigation.

When to make a Cohabitation Agreement?

It’s usually a good time to start thinking about creating this when you first move in together, or have children. However, it is still beneficial for couples that have been together long term already, to enter into an agreement now.

You may have decided you are not going to get married? Or at least not for a good few years.

Whatever stage you’re at there is no better time like now when it comes to protecting your finances and other assets. You may find that you actually have differing opinions on the agreed ownership of property, and how family finances should be arranged; and the worst time to discover this would be following the breakdown of the relationship/separation – so it would be a good idea to have this discussion now.

What issues would a Cohabitation Agreement help with?

Property

Within the agreement many different arrangements regarding the property you own/live in can be made. Who has what legal share, how mortgage payments will be handled/paid for, even what living arrangements would come into force upon a separation.

It is advisable for couples living together to be ‘Joint Tenants’, this therefore gives them both equal rights and responsibilities.

Finances

In the case of the relationship ending it will be helpful to have a plan in place for how debts will be settled and managed and in what way any savings or other wealth will be split. Also other aspects such as, what support will be provided to any children, and how any adjustments to pension schemes will be handled; can also be agreed on.

Inheritance

In the event of one partner’s death, if no Will is left, the other will not automatically inherit anything (unless property is in joint name). Wills need to be made by an unmarried couple if they wish for their partner to have an inheritance. If not enough is left in the Will of one for the other to survive on, they may be able to claim from the estate at court. Unmarried partners are not exempt from inheritance tax, as married couples are.

It is also worthwhile to be aware that if you are living together and both have separate bank accounts, neither of you have access to the other’s and the money it holds. So if one partner dies, any balance remaining in their account will be property of their estate.

If you have a joint account, you both have access, regardless of who pays what into it. If the relationship ends, with a joint bank account, the money it holds will belong to both of you. On the death of one partner, the other becomes entitled to the balance and full access to the account.

Other aspects such as child arrangements, who looks after any pets, and ownership of vehicles etc can all also be covered with a cohabitation agreement.

Do I still need to make a Will?

The law does not recognise unmarried couples as each other’s next of kin; consequently upon the death of one party, the other is not automatically entitled to any inheritance. It is important therefore to make a Will so that you can ensure your wishes, in regarding how your estate and assets are dealt with, are known.

 

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2019-05-23T14:29:51+01:00

Mr Leonard

I was treated absolutely superbly! The whole issue from start to finish was dealt with professionally, but with a humanising aspect; bringing the matter to a satisfactory conclusion for all parties involved.

Meet the team

Karen Brookes - Family Law - Barnsley
Karen Brookes
Chartered Legal Executive
Jessica Bullock - Barnsley Family Law
Jessica Bullock
Legal Assistant