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What Is a Cohabitation Agreement and Why Do You Need One?

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Most couples will now spend at least some time living together without getting married, with an increasing number of couples choosing to sidestep marriage altogether. What many of these couples may not realise, however, is that they could be leaving themselves in a vulnerable position if they later separate.

 

Couples who are not married or in a civil partnership have no automatic legal rights with respect to each other’s assets, including property. There is a common misconception that if you live together for long enough, you are covered by the principle of ‘common law marriage’, but there is no such thing in English law. This means that, if you split up, you won’t be able to claim any share of assets in your partner’s name.

 

It is sadly all too common for people to find themselves in serious financial difficulties when a relationship ends, especially if they have made sacrifices such as giving up work or accepting a reduced income in order to raise children. While gender roles are not as rigid as they once were, this does still tend to disproportionately affect women.

 

The good news is, there is a solution which can help to protect unmarried couples against such problems and ensure that both people’s contribution to the relationship is fully recognised. A cohabitation agreement can allow you to set out exactly what will happen if you ever separate, including how any key assets will be divided.

 

How do cohabitation agreements work?

A cohabitation agreement is a legal document in which you and your partner will set out how any important decisions will be dealt with during your relationship and should you separate.

 

Cohabitation agreements are legal contracts between the people in the relationship. While there are differing views about their legal enforceability, a well drafted cohabitation agreement will reduce the scope for dispute.

 

In practice, cohabitation agreements work by ensuring potential problems are considered in advance and couples can agree what a fair outcome would look like. This avoids the risk of either person making assumptions about their rights or about what is fair with which the other might disagree.

 

What does a cohabitation agreement cover?

A cohabitation agreement can cover how to deal with issues that may arise during your relationship, as well as anything that will need to be dealt with should you separate.

 

Common things to include in a cohabitation agreement with respect to a future separation include:

  • What happens to your family home
  • Who any children would live with
  • How savings, investments and other assets would be split

 

Ongoing issues you may want to define in a cohabitation agreement include:

  • How your rent or mortgage should be paid
  • How bills will be paid
  • Life insurance policies
  • Pensions
  • How any debt held by either person will be handled
  • How the care of any children will be divided

 

Ultimately, however, a cohabitation agreement has to be tailored to you and your partner, your circumstances, your needs and the needs of any children. It is therefore essential to get specialist legal advice at an early stage.

 

Is it worth making a cohabitation agreement?

In almost all cases, our advice would be to make a cohabitation agreement if you are planning to live together for any significant period of time without getting married.

 

While it might seem unromantic, the reality is that having a sensible discussion about these matters in advance can help avoid future distress and actually strengthen your relationship by making sure both know where you stand and have agreed what is fair.

 

It is particularly important to make a cohabitation agreement if any of the following apply:

  • You are buying a house together
  • One of you lives or will be living in a house the other owns
  • One of you is financially dependent on the other
  • You have children together

 

What happens if your circumstances change?

If your relationship lasts any length of time, then it is inevitable that your circumstances will change. Your cohabitation agreement will likely need to be revised periodically to reflect this.

 

If you fail to update your cohabitation agreement it could leave you at risk e.g. if you buy a house and this isn’t included. It could also risk making the agreement invalid as, for example, the needs of any children will always have to come first, so if you have children after making the agreement, its terms may no longer be applicable.

 

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