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Cohabitation Agreements – Are They Worth It?

There is an ongoing myth that a ‘common law partner’ has the same legal rights to make financial claims in the event of relationship breakdown, as a married spouse. This is not the case and cohabiting couples do not enjoy the same legal status as those who are married, no matter how long they have lived together.

A recent survey by family law group Resolution, has once again revealed that half of unmarried couples do not know that they lack certain legal rights should they split up.

A change in the law has long since been campaigned for and discussed though whilst waiting for change, what can people do to try to ensure some certainty around their position if things don’t work out as hoped?

A Cohabitation Agreement is available to set out intentions in writing when living together to protect financial interests should a relationship break down.

The cohabitation agreement sets out the terms of an arrangement between parties relating to their cohabitation, particularly in respect of property or other financial assets. The benefit of having such a document is that it removes any ambiguity concerning the arrangements should the relationship end.

Cohabitation agreements are not limited to relationships of a romantic nature. They can cover a variety of cohabiting relationships such as siblings and friends. Albeit not as commonly used, a cohabitation agreement can also cover the position on financial and children’s matters.

Whilst a cohabitation agreement is not a court order, in the event of a relationship ending, it can be exhibited to a court to demonstrate the parties’ prior intentions where this is disputed and can create a legally binding contract.

For a cohabitation agreement to be effective, ideally it should satisfy the  criteria that:

  1. Full financial disclosure was exchanged between parties;
  2. All parties received legal advice on the matter; and
  3. The document has been properly drafted and executed as a deed.

Disputes following relationship breakdown can be expensive in both financial and emotional terms. A cohabitation agreement can be binding which may be very important where a Court lacks the ability to make orders which otherwise would seem fair to a couple at the time they were in their relationship.

A well drafted cohabitation agreement could be a cost-effective measure to ensure all parties are in a better position to achieve a fair outcome if things don’t work out. Think of it like a really good insurance policy.

A cohabitation agreement is not only advisable to save the cost and distress of later dispute but also because it is flexible. Parties do not need the court’s approval to change terms of a cohabitation agreement and assuming all parties agree, it could be amended easily to reflect a change in circumstances at any time with modest cost.

Some may be worried about the cost of involving solicitors to help with such an agreement.  It may be possible to help keep the costs more manageable by getting information in advance of seeking advice. You can even set out in writing some terms that have been discussed and agreed although it’s always best to get advice before signing anything, particularly if you could be held to that document if there is a later dispute.  It is important to always understand the implications of what you are signing and there may be things that have not been considered.  Most solicitors will give an indication of costs prior to taking on any work and so it is always worth checking first.

Although cohabitation agreements may be thought to be unromantic and distrusting, life can throw up many unexpected challenges; preparing for them as a worst-case scenario does not increase the risk of them happening, nor does it suggest intention for them to happen. It simply protects parties as individuals, with the hope that it will never need to be used.

If there is a cohabiting relationship that may then become a marriage, a cohabitation agreement can reflect that or can be updated with a pre-nuptial agreement with any amendments necessary because of the change of circumstances.

Cohabiting couples also don’t have the same rights as married couples when it comes to inheritance.  Where couples have children and are not married, a sudden and unexpected death of one party is devastating enough without then realising that you and the children may not be as secure as anticipated.

Where you are unsure about the position in law, much information is available online and a good starting point is the information on the family section of our website.

Our Family Law solicitors are members of Resolution, and at Band Hatton Button LLP we encourage and welcome alternative methods to court litigation and aim to work with you to reach an amicable agreement. For further information please contact any member of the Family team.

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