cohabitation contracts

by Helen Howard

cohabitation contracts | help and info

Couples who live together – both hetereosexual and same sex – do not fit tidily within the law. In some ways they are treated just like married couples – when applying for a mortgage or working out child support for example – but in other areas, like property rights, pensions and inheritance, they come up against laws which are out of date and frankly messy.

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Many couples discover that although their common law marriage may have existed if they ever had to claim social security benefits, it has only limited legal status on bereavement or break-up. They can find themselves faced with unexpected tax bills on inheritance or the prospect of an expensive gamble via legal proceedings to sort out who owns what.

But couples can sidestep the archaic laws and create a framework to regulate their legal and financial obligations to each other, by making a cohabitation contract, sometimes called a living-together agreement. It usually won't be enough in itself – family lawyers recommend that both a trust deed setting out property rights and a will are also essential for good legal health.

Ironically, couples who opt for the apparent free-spirit nature of living together rather than the institution of marriage may find that if they want to protect their rights they end up with more paperwork and more things to sort out rather than less.

pros and cons

The chief pro of cohabitation contracts is that they help clarify financial commitments. Long-term relationships, especially those with children, involve a business partnership as well as a romantic bond. Balancing the budget between income and outgoings, working out who pays what and how responsibilities are shared in running the home – all need sorting out for an harmonious home life.

There is much to be said too for planning ahead, especially to deal with the fallout from unplanned events such as another child, separation, long-term illness or death.

There's no cast iron guarantee that a court will uphold the terms of a cohabitation contract in the UK – although if you've both had legal advice and shared honestly with each other what you each earn, own and owe, couples can maximise the chances of the court holding each of them to their side of the bargain.

The chief con of a cohabitation contract for many is that thinking about and talking through all the issues that should be covered – including death, divorce and illness – involves often long, hard work. The temptations to avoid it can be legion. But talking about the terms of a contract could be looked on as a massive plus to a relationship, showing it is mature enough to work through major decisions.

what should a contract cover?

Cohabitation contracts should include:-

• A statement of the purpose of the contract and whether or not you intend it to be legally binding.
• The couple's full names, addresses and ages and also a disclosure of your financial position and your state of health.
• Duration – how long you want it to last for. This could be for life, but reviews should be built in – say every five years or after a major life event, like the birth of a child.
• Property – how you intend to deal with the property you owned before the relationship and any property you acquire during it. If someone moved into a house owned solely by their partner, they do not have any automatic right to stay in the home if asked to leave. So a trust deed is invaluable for longer-term relationships to state what shares each of you own and what should happen in the event of separation. Savings, pensions, endowment policies should also be covered – you will need to complete an Expression of Wish form if you want your partner to benefit from your pension (but pension trustees have a discretion before agreeing to this).
• Income/expenses – whether you will pool your income into a joint account, or keep separate accounts, whether either of you will support the other if she or he gives up work and for how long. An unmarried partner has no right in law to apply for maintenance (though if they have a child with a partner, they are legally able to claim maintenance for the child), but you can make a legally binding agreement to support each other through a cohabitation contract.
• Children – whether or not you plan to have any, how you want them to be educated etc.
• Inheritance and wills – what you plan to leave to each other. Bear in mind that marriage will make void any will you already have so you'll need to make a new one after tying the knot. You should make a will if you haven't already done so and update this regularly.
• Changes – what happens if either of you wants to change the contract or if you separate. You can put in that you both agree to mediation if you cannot agree between yourselves.
• Extras – because a cohabitation contract is a relatively informal document, you can customise it to your own requirements – and some couples include in it their plans for holidays (who chooses where to go) and how they will share the housework. But it is highly unlikely you would be able to get a court to enforce these personal intentions.

common law marriage

Popular myth has not caught up with the fact that there's just no such thing under the law as a common law marriage, which naturally goes for common law husbands and wives too. In England and Wales you can live together for 25 years as Mr and Mrs Bloggs without acquiring any legal rights to a share of the home or maintenance. In Scotland, where laws often seem more humane, The Family Law Scotland Act 2006 (section Rights in certain household goods) gives rights to people who live together whether gay or straight when they separate.

However the English courts have held that if you contribute to the mortgage or rental payment of the home, or even if you have not but you have contributed in some other financial way such as contributing to the cost of repairs or improvements, then you can gain a right to a share of the home.

gay couples

Same-sex couples – still under UK law unable to marry – have long been aware of the pitfalls of cohabiting outside marriage and have been campaigning for legal recognition of their partnerships.

One irony of that campaign is that the right to take over a partner's tenancy of the family home on bereavement has been gained, regardless of any cohabitation agreement existing, but if a couple share a home they are buying the rights are much more limited.

The campaign at last seems to be bearing fruit. The government introduced plans in December 2002 to offer gay couples equal rights with married couples if they register a civil partnership legally by signing a register. This move follows the introduction in 2001 by Ken Livingstone, London Mayor, of a civil register. 365 couples had signed the register – only one of whom was heterosexual – but they still faced the drawback of no proper legal recognition. The government-backed scheme – which enables same-sex couples to qualify for next-of-kin entitlements on inheritance tax, pensions and property – is likely to attract many more couples.

There will still be big legal differences between civil partnership and marriage. For example, a couple can get married and have all the legal rights and benefits after only knowing each other a few days, but a same-sex couple will almost certainly be required to show a lengthy commitment to each other before they are allowed to register their partnership. Currently, for immigration purposes, a same-sex couple must show they have had a relationship of two years standing, and it is likely that a similar term will be imposed for registering a partnership.

Consequently it will be the case that same-sex couples will need to protect each other in the early stage of their relationship. They must ensure they write wills and possibly make a cohabitation agreement, to provide security in the event of bereavement or break-up. This would then have to be reformulated at the time they take advantage of registering their partnership.

legal changes ahead?

The Law Commission – the government's law reform body – described the laws on cohabitees' property rights as 'unfair, uncertain and illogical' in 1994 when it began a project to update the law to cope with the needs of the estimated three million couples who live together outside marriage.

Eight years on, new laws are no nearer – the Law Commission admitted in July 2002 it was unable to come up with a simple model for sorting out property rights of home-sharers when the relationship ends. The Law Commission did recommend however that cohabiting partners who had lived together for two years should get the right to a share of their home if they separate, regardless of who has paid for the property or its maintenance.

top tips for cohabitation contracts

• Discuss with your partner what you ideally want the contract to cover – as you will have a lot to talk about, ensure you set aside enough time.
• You will both need your own solicitors – professional etiquette means that one cannot act for both of you. Expect to pay around £600 for a cohabitation contract, more in London and for more senior solicitors.
• You can find such contracts on the internet but you'll have to demonstrate that you both got independent legal advice, and that there was full financial disclosure, for it to be watertight in court. A good starting point for getting a local solicitor who specialises in family law is the Solicitors Family Law Association – telephone 01689 850227. For further information see help and info.
• Review your contract regularly – at least once every five years and after any major life event, like a birth or a plan to move abroad.

Helen Howard is a family lawyer and mediator

(June 2003, resources updated June 2005)

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