Family lawyers have called on the Government to follow the example of other countries and install explicit financial protections for cohabitants when a relationship ends.
William Healing, a partner at Alexiou Fisher Philipps LLP in London, says there is no unified body of law in England and Wales which protects cohabitants. Instead, unmarried couples must rely on two pieces of legislation in most cases:
the Trusts of Land Act 1996, in order to assert an interest in property;
the Children Act 1989, to assert property claims to house a child until no more than age 22 and child maintenance.
Healing explains that a rush of Supreme Court cases within the past ten years confirmed that the law regarding constructive trusts is unpredictable, unfair to the weaker financial party, and out of date. He says:
‘Many unmarried cohabitants find themselves at the end of long relationships with no claims they can bring, or at best with uncertain, costly claims to bring before the courts.’
Izzy Walsh, senior associate at Dawson Cornwell, says it is dangerous for couples to rely on the mythical ‘common law’ marriage because if one party gives up work in the mistaken belief that they have certain rights arising from their relationship, when the relationship breaks down, they have no right to share in their partner’s income despite the fact that their earning capacity or ability to return to work may have been significantly impacted.
Walsh explains that similarly, a couple may spend many years building up a home together, but if they have not taken the necessary steps to protect their positions, ‘one or other could find themselves excluded from any share of what they perceive to be the joint family home’. The provision for children of an unmarried couple is also much more restricted than it would be had the parents been married.
Current law ‘out of step’ with society
Anthony Gold solicitor Ellen Lucas says current law is ‘out of step with the way we live our lives’. Lucas believes:
‘Parliament could legislate to offer explicit financial protection for cohabitants both when a relationship ends and on the death of a cohabitant.’
Izzy Walsh says the Government could take a number of steps to improve the situation for cohabitating couples, such as:
creating a statutory framework of rights and responsibilities for cohabiting couples, on an opt-out basis;
ensuring clear statutory recognition of the financial obligations of both unmarried parents towards a child;
providing powers for courts to transfer property or make other financial orders upon the breakdown of a relationship.
Cohabitation agreements Until the law is changed, Nigel Shepherd says cohabitating couples can protect themselves by drawing up a ‘cohabitation agreement’ which sets out intentions for finances, property and care of any children if the relationship breaks down.
Emily Brand, partner at Boodle Hatfield, says a Cohabitation Bill was proposed nearly ten years ago, but was never accepted into English legislation. She says it would have given 'greater statutory protection to cohabitants, allowing the court to make a financial order if it felt just and equitable to do so'. She says the court would have also been obliged to take into account much of the same factors as it does now for couples settling finances after the breakdown of a marriage, including the welfare of any child, the length of the relationship and the contributions of each party.
Ellen Lucas says entering into a cohabitation agreement is sensible, ‘so that it is clear how you and your partner intend matters to be dealt with should your relationship break down’.
Lucas explains that if a couple is purchasing a property they can enter into a declaration of trust that expressly sets out the legal and beneficial ownership of the property, taking into account any particular financial contributions made. She adds that it is important to make a Will and take out life insurance to protect the one partner in the event of the other’s death.
Overseas examplesIzzy Walsh notes there is a great deal of variation globally in how cohabiting couples are protected, or not, from a legal perspective. For example, in Scotland, while there are no automatic rights, the courts can compensate in certain circumstances for gains or losses flowing from a cohabiting relationship.
Walsh explains that in Australia cohabiting couples acquire rights which are broadly equal to those of a married couple providing certain criteria are met, and the threshold is relatively low.
In France, William Healing says there is protection but the system is completely different, allowing parties to opt into a PACS (Pacte Civil de Solidarité) at the start of or during the relationship. The PACS permits the parties to regulate the property consequences of their relationship in the event of separation or other events such as death. He says:
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‘This flows from the very different structures in a civil legal system for regulating the consequences of marriage and relationships. This is based on the civil law system of property regimes.'