Contrary to popular belief, under the law of England and Wales, there is no such thing as a common law marriage. This means that cohabitants have no legal rights against each other in the same way that married couples do.
Unfortunately, as so many people believe that there is such a thing as common law marriage, and that they will be protected in the event of relationship breakdown, issues can the arise as to, for example, the ownership of the family home, bank accounts, investments and personal chattels.
Where the cohabitees own a property, a declaration of trust is advisable to document their respective interests in a property. For example, it may be that one party paid all or most of the purchase deposit, and a declaration of trust could provide for that party to recover that deposit (either as a figure or a percentage of the purchase price) before the rest of the equity in the property is divided. Without evidence of what is to happen to the equity in the property upon a separation and/or sale, it will likely prove very difficult to recover more than an equal division of the equity.
A declaration of trust could also be used to set out:
- What should happen in the event that one of the cohabitees wishes to sell the property and the other doesn’t
- What should happen to the property in the event of the death of either party; and
- What should happen if one of the cohabitees wishes to ‘buy out’ the other.
A cohabitation agreement can also be used to set out an agreement in relation to other issues, such as the ownership of any bank accounts, vehicles or other assets as well as who will be responsible for the outgoings of the property.
It is also important for those in a cohabiting relationship to be aware that it is not possible for pensions to be divided upon separation in the same way as upon a divorce. This often leaves a party whom has given up work to care for the children of the relationship in a vulnerable position, whilst the other party has been able to work and build a pension. A cohabitation agreement could provide for the pension-deprived party to receive some other benefit in lieu of future pension provision.
Where the couple have children, claims may also be brought on separation on behalf of the children for maintenance, lump sums and transfers of property.
For more information on declaration of trusts or cohabitation agreements, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.