One of the most common myths in English law is that there is such a thing as a 'common-law marriage'. It simply doesn't exist and this misapprehension has led the Law Commission to suggest proposals to give additional rights to cohabiting couples. The Law Commission issued a report outlining proposed changes to the law, designed to set out the rights of cohabitees, summer of 2007. The proposed changes will benefit cohabitees who contribute to the assets of the partnership or who have children. The necessary legislation is unlikley to come into force until late 2008 at the earliest.  Until any changes are made (which could be several years away), cohabitees continue to have few rights. When a marriage or civil partnership breaks up, the rights of the respective partners are relatively clear. When the relationship of a couple who have been living together breaks up, the difference between a legally-recognised partnership and an informal one becomes all too obvious.

 

For example, on the death of an unmarried partner not only do the intestacy laws make no provision for the bereaved person to inherit from the estate of their partner, but also the surviving partner does not benefit from the exemption from Inheritance Tax that would apply if the deceased’s estate passed to a spouse or civil partner.

 

Indeed, in order to receive anything at all, the surviving partner may well have to go to court to show that they co-owned assets which in some cases may have been paid for by both partners but were owned in one name only. The surviving partner may also have to show that they qualify for financial provision to be made out of the estate under the Inheritance (Provision for Family and Dependants) Act 1975, which is designed to protect the families of people who die without leaving adequate financial provision for them. In any event, the surviving partner may face severe financial pressure whilst a claim is ongoing, even if it is ultimately successful.

 

For example, consider the recent case of a woman who had lived with her alcoholic partner for nearly three decades, as man and wife, before moving out, because she feared for her safety, shortly before he died. He left no will. Had they been married the situation would have been simple. However, in this case the woman was forced to go to court to prove her entitlement to financial provision, which was resisted by her late partner’s family.

 

Another case involved two barristers who had lived together. When they split up, long and expensive court proceedings were necessary to decide the appropriate apportionment of the two properties they owned, both of which were held in the name of one of them.

 

 

One easy and inexpensive solution is to make a cohabitation agreement. This is a contract between two people who live together, which sets out their agreement of the division of their combined assets. It is sensible when cohabiting with anyone, without the protection afforded by marriage or a civil partnership, to enter into a cohabitation agreement so that ‘who owns what’ is clear. This is not only important if a relationship breaks down, but also if one of the partners dies.

 

 

Like any contract, it should state who it is between, how long it is intended to last and that it is intended to be legally binding. If there are particular assets (e.g. your home) which are to be dealt with in a particular way, these should be specifically mentioned and how they are to be dealt with on death or break-up made clear. It is not uncommon for a couple to sell one of their properties when they move in together, with the property they live in being retained in the name of the original purchaser. In such cases, it is sensible to decide if the non-owning spouse’s contribution is to be treated, for example, as a loan or if they are entitled to a percentage of the property value.

 

The ownership of all significant assets – bank accounts, insurances, specific valuables etc. – should be considered. Details of income and expense sharing arrangements should be included if possible and if there is the intention that one partner should support the other, this should also be mentioned, as should any financial arrangements regarding family members.

 

Lastly, the agreement can include any other matters that you wish to agree between yourselves – you can even include how the housework is to be shared!

 

It is obvious that a cohabitation agreement is normally best considered in tandem with your will. There are tax planning and other issues to consider – for example, you might think about writing any death in service benefits or insurances in trust for your partner.