What is a cohabitation agreement?

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Unmarried couples living together are one of Britain’s fastest growing family types. But unlike married couples who have various legal rights, this does not apply to unmarried cohabiting couples, despite the speculation that when you live together, you are considered to be in a ‘common law partnership’. However, no such law exists, leaving those without a cohabitation agreement at risk.

Where married spouses have inheritance tax rights and automatic entitlements to estates left without a Will, unmarried cohabiting couples do not have such claims. If an unmarried cohabiting couple was to separate, complications over assets, children and other aspects could arise. Neither party can claim ownership of each other’s possessions. This applies to all types of individually owned assets, such as property, cars, as well as smaller assets, including furniture.

In order for cohabiting couples to have protection and legal rights where there is a relationship breakdown or either party dies, a cohabitation agreement is paramount, as is making a legitimate Will.

A cohabiting agreement is a document stating certain factors within a cohabiting couple’s relationship. The most common information which is provided within the document is each parties’ ownership of certain assets, what each parties’ financial responsibilities will be in regard to each other and how any savings and jointly owned assets will be distributed should you later break up.

Here we will discuss the ins and outs of cohabitation agreements, including why they are crucial to have, the information that is essential to include and why you need a solicitor’s help.

Why do you need a cohabitation agreement?

Without a cohabitation agreement in place, there is no protection in place for either party involved. When a couple chooses to live together, it is recommended to pursue legal advice and practical guidance in regard to making a cohabitation agreement.

A cohabitation agreement is important because it will help you to:

Have a clear understanding of what each person’s financial commitments are
Understand your rights and responsibilities in regard to living together, e.g., ownership of property
Avoid misunderstandings and disagreements if the relationship breaks down
Have evidence if court proceedings are needed

As well as having a cohabitation agreement in place, it is imperative to have a Will, as cohabiting partners do not have automatic rights to their partner’s estate. Please see our Wills, trusts & estates solicitors for more information.

What should a cohabitation agreement include?

When deciding to create a cohabitation agreement, there are some essential fundamental elements that should be included, such as:

Any assets separately owned by either party prior to cohabiting
Any assets jointly owned, such as property, vehicles, etc.
Household bills
Children the party have together
Pets the party have together

Once a cohabitation agreement has been created, it can still be amended. It’s important to update the agreement where you are experiencing any significant changes to your life and finances. For example, it should be amended if:

Any children are born/adopted
Either party becomes seriously ill
Either party becomes disabled
Either party is made redundant
Either party’s financial circumstances significantly change
Either party receives a large inheritance
You plan on marrying or entering a civil partnership

Are cohabitation agreements legally binding?

A cohabitation agreement is a contract between two parties in a relationship. It can be considered a legally binding document, but only if the cohabitation agreement was properly executed when it was made. As it can be considered a legally binding document, it can be completely enforceable by the courts.

The conditions that must be followed for a cohabitation agreement to be correctly executed include:

Each party involved must enter the cohabitation agreement freely and voluntarily
The agreement must be set out in the form of a deed
Each party must sign the agreement in the presence of witnesses
Each party must obtain independent legal advice and guidance
Each party must be honest in regard to their personal finances
The agreement must be updated where major life changes apply

Even where all of the above conditions are followed correctly, there are circumstances where the courts will not make a cohabitation agreement enforceable, for example, where they perceive the agreement as unfair.

Do you need a solicitor for a cohabitation agreement?

The advice and assistance of an expert solicitor is absolutely crucial when it comes to making a cohabitation agreement. Not only is individual legal advice required to ensure that the agreement has been properly executed and legally binding, but it also helps to avoid any mistakes and guarantees reassurance that everything has been done correctly.

Get in touch with our cohabitation solicitors today

To speak to one of our cohabitation solicitors today, then please ring 0208 680 5018 or contact your local Atkins Hope office in Croydon, Medway or Blackheath.