In this article family law and UHNWI finance specialist Claire O'Flinn discusses the key misconceptions around cohabitation.
A recent report shows that 48% of cohabiting couples in England and Wales believe that they are in a common law relationship with their partner and that, as such, they are protected by the same laws and have the same rights as those who are married or are in civil partnerships.
In England and Wales the concept of a common law husband or wife is in fact a misconception. The law of England and Wales does not recognise people living together as being in a legal relationship and so unmarried couples are exposed to huge risks should their relationship break down. Yet many do not know of the risks they are exposed to or, moreover, the preventive steps that they could, or even should, take to protect themselves.
Cohabitation agreements are like prenuptial agreements but without the wedding, the dress and the cake. You may hear them called “no-nups”. These agreements set out who owns what and in what proportion and gives couples the freedom to set out how they intend to split their property and assets should the relationship end. They can also be used in a more positive way to record how the relationship will work, such as who will pay the mortgage, pay for the holidays, pay for the refurbishment or renovation of the property, whether they intend to take out life insurance or to make a will.
Which brings me nicely on to wills. If you die without leaving a will (that is, to die intestate), there are very strict rules governing who gets what and, once again, unmarried couples are not recognised under law. The only way for an unmarried partner to inherit is under a will; remember that the concept of common law husband or wife does not exist and so it should not be left to chance.
Care should also be taken when unmarried couples buy a property together, either as a home or an investment property. More often than not, a declaration of trust setting out who provided what towards the purchase price, and the proportions they each will get out upon sale, is highly advisable. A disagreement later about property ownership is best to be avoided.
Scaremongering, this isn’t. While there are calls for a legal framework to protect the rights and responsibilities of unmarried couples when they split up, the government has indicated that such reform remains a long way off. Brexit gets in the way. Time and again family lawyers are asked to advise on the breakdown of a cohabiting relationship and so often the cost and heartache of sorting the mess out could have been avoided by basic relationship planning by lawyers when the relationship was healthy. Cohabitation agreements, wills and declarations of trust may seem unnecessary when times are good but, like pre-nups, they can save acrimony and significant legal costs should the relationship turn bad.