Cohabitation law reform has been a pressing issue on the political agenda in England and Wales for years, with family lawyers and legal experts consistently advocating for change as they have recognised the growing trend of cohabitation as an alternative to marriage.
However, as more people choose to cohabit, many remain unaware of the significant legal differences between marriage and cohabitation, especially when it comes to financial protection and property rights.
The misconception of the ‘common law marriage’
A common misconception among many cohabiting couples is the belief in the existence of a ‘common law marriage’. It is often thought that simply living together for an extended period creates legal rights similar to those of married couples.
However, this is not the case. In England and Wales, there is no such thing as a ‘common law husband’ or ‘common law wife’.
Regardless of the length of time a couple has lived together, cohabiting partners do not have the same legal rights as married couples. This lack of protection becomes particularly evident in situations where a cohabiting relationship ends.
When a married couple divorces, they have the protection of the financial claims available under the Matrimonial Causes Act 1973. This law provides a framework for dividing assets, including property, savings and pensions and can also require one spouse to support the other financially by way of maintenance.
In contrast, cohabiting partners have no such automatic rights. If the relationship breaks down and the parties own a property together, the division of the property is governed by trust and property law, which may not take into account factors such as contributions made by the parties or their future needs.
As a result, cohabitees can find themselves at a significant disadvantage when compared to married couples.
The importance of legal protection for cohabiting couples
Given the lack of automatic legal protection, it is crucial for cohabiting couples to take proactive steps to protect their financial interests.
One of the most effective ways for cohabiting couples to protect themselves is by entering into a Declaration of Trust when buying a property together. This legal document clearly defines the beneficial interest each partner has in the property, specifying how the net equity will be divided if the property is sold.
A Declaration of Trust is particularly important in situations where one partner contributes more to the purchase price, mortgage payments, or property improvements. Without this document, there may be a presumption of equal ownership, which could lead to disputes and financial loss if the relationship breaks down.
In addition to a Declaration of Trust, couples can also enter into a Cohabitation Agreement. This agreement can cover a wide range of financial and practical matters, including the payment of bills, ownership of cars and other assets and the treatment of debts.
A Cohabitation Agreement can also outline each partner’s financial responsibilities, reducing the risk of disputes and providing clarity and certainty in the event of a separation. By setting out these matters in advance, couples can avoid the stress and cost of litigation if their relationship ends.
The role of pre-nuptial agreements for cohabiting couples planning to marry
For couples who are cohabiting but planning to marry, a pre-nuptial agreement (Pre Nup) can be an essential tool.
While pre-nuptial agreements are often seen as unromantic, they play a crucial role in protecting individual assets and wealth.
If one or both parties have pre-acquired wealth or anticipate inheriting substantial sums in the future, a pre-nuptial agreement can ensure that these assets are not considered part of the marital estate in the event of a divorce.
Pre-nuptial agreements are particularly important in cases where there is a significant disparity in wealth between the parties or when one party has family assets or businesses that they wish to keep separate from matrimonial property.
By entering into a pre-nuptial agreement, couples can define their financial expectations and protect their respective interests, reducing the likelihood of lengthy and costly legal battles in the future.
Why legal advice is essential
Navigating the complexities of cohabitation law and understanding the various legal options available can be challenging without professional guidance.
Seeking legal advice allows couples to make informed decisions about their financial arrangements and ensure that they are adequately protected. Here are some of the key reasons why it is important to get legal advice:
- Clarification of legal rights and responsibilities: Many cohabiting couples are unaware of the limited legal rights they have compared to married couples. Legal advice can help clarify these rights and responsibilities, ensuring that both parties understand their position and can make informed decisions.
- Protection of financial interests: By obtaining legal advice, couples can learn about the various legal documents and agreements that can protect their financial interests. This can prevent disputes and financial losses in the event of a relationship breakdown.
- Prevention of future disputes: Legal advice can help couples draft clear and comprehensive agreements that set out their financial arrangements and responsibilities. This can prevent misunderstandings and disputes in the future, saving time, money and emotional stress.
- Tailored advice for unique situations: Every relationship is unique and legal advice can be tailored to the specific circumstances of each couple. Whether one partner has significantly more assets, has children from previous relationships, or there are complex property arrangements, a lawyer can provide guidance that takes all relevant factors into account.
- Preparation for the unexpected: Life is unpredictable, and relationships can change. Legal advice can help couples prepare for the unexpected by putting in place appropriate legal arrangements. This can provide peace of mind and security, knowing that their interests are safeguarded.
As the number of cohabiting couples continues to rise, it is essential to recognise the legal differences. Unlike married couples, cohabiting partners do not have automatic legal rights or protections in the event of a relationship breakdown.
By understanding the limitations of cohabitation law and utilising legal tools such as declarations of trust, cohabitation agreements and pre-nuptial agreements, couples can ensure that their rights are protected, and their interests safeguarded.
How can Morr & Co help?
If you would like to discuss your situation with an experienced solicitor, our experienced family team will be able to answer any questions you may have. You can contact them by email [email protected] or by calling 01737 854500.