Despite the cohabiting family being the fastest growing family type, few people are aware that unmarried couples don’t share the same rights or obligations as a spouse in the event of separation or death.
Cohabiting couples in the UK have risen by 25.8% over the past decade, according to the Office of National Statistics. But, contrary to popular belief, a ‘common law marriage’ does not exist. Under current law you could be living with someone for decades, have children together, and yet not automatically be entitled to any financial support or a share of property and pensions if the relationship breaks down.
As many more couples are choosing to cohabit over marriage, here is a list of key points to consider before moving in together:
Consult a solicitor to draw up a cohabitation agreement. This agreement is a document that sets out your financial rights and obligations towards each other whilst living together and how assets and income should be divided if the relationship breaks down. The agreement can cover how assets are owned, the payment of household bills and other monthly expenses and how property and savings should be divided if you split up. It can also deal with financial support for each other and any children of the relationship. Remember that for the agreement to be upheld in the event of a dispute, it must be signed in front of a witness and you should both take separate independent legal advice.
If you are considering purchasing a property jointly but are contributing different amounts to the purchase price or, despite not being the registered owner, will be making a financial contribution to the purchase price, you are strongly advised to have a declaration of trust drawn up by your conveyancer. This legally binding document sets out the beneficial ownership and how much is to be repaid to each party if the property is sold. In the absence of a declaration of trust, you may have a claim for an interest in the property if you have made a financial contribution – however, starting a property claim under trust law is expensive and time consuming.
If you are purchasing a property jointly you should also consider whether you want to own the property as joint tenants or tenants in common. If you own the property as joint tenants the property will automatically pass to your partner on death, whereas if you own the property as tenants in common your share would pass under the terms of your will and will not automatically pass your partner, leaving them in a financially vulnerable position.
Having a will
It is important that you make a will to ensure your partner is adequately provided for in the event of death. Cohabiting but unmarried couples do not automatically inherit under the intestacy rules if their partner dies without a will. Consider your financial responsibilities: in the absence of a will your partner will have to go through lengthy and expensive court proceedings to obtain financial support.
It is important to consider taking out a life insurance policy and checking that payments can be made to unmarried partners. You may also want to nominate each other to receive any death benefits under your pension schemes. However, not all pension providers will specifically allow for cohabitants to be nominated as a beneficiary, so it is important to check!