Cohabitation and your cash: what are your rights

Couple carrying moving boxes into new home

As a cohabiting couple you may think that you have financial rights as a 'common-law spouse' but this myth won't protect you should the relationship disintegrate.

It is often mistakenly thought that couples who live together, or cohabit, for a certain period of time automatically receive the same rights as married couples, who are bound by law to split assets evenly in the event of a divorce no matter what contribution was made by the parties.

A cohabiting couple may have exactly the same financial commitments as a married couple; own a house, have a joint account and savings, and one partner may be financially dependent on the other, but if the relationship breaks down the division of the assets is very different to a married couple.

Each party leaves with what owned from the outset. If the couple lived in a house owned by one person their partner does not have any claim on it, even if they have paid bills, helped to renovate it or contributed in other ways.

Michael Gregory of law firm Clarion and specialist in family law and the division of financial assets, said cohabiting couples have little legal protection in the event of a separation.

"Cohabiting couples do not get the same rights [as married couples]. The government did a big campaign a while ago to try and dismiss this myth but it hasn't got through," he said.

When a cohabiting couple splits they only take away from the relationship what is theirs, not necessarily what they contributed, and will have to fight to claim a bigger stake. For example paying to help renovate your partner's home, which you live in but they own, does not entitle you to a stake in the property, but if you paid money into a joint account then you would be entitled to take what is yours.

The addition of children into the equation does not bring any additional rights for cohabiting couples. Where married couples and civil partners can claim child maintenance and even spousal maintenance, cohabiting couples do not have any financial responsibility to their former partner or additional financial responsibility outside of what is ordered under the government's maintenance system.

Any dispute over financial assets between couples living together has to be administered through the estate and trust laws, said Gregory.

"You have to prove that you should have an increased share or more of a benefit in something," he said.

Gregory said cohabiting couples can protect themselves by writing up a 'cohabitation agreement', known also as a 'living together agreement', or a 'declaration of trust'.

Both these contracts are legally binding and set out exactly what each party receives back in the event of a separation and can outline any spousal or child payments that will be made.

Couples can agree on what they will save and who contributes what to the mortgage and bills and what this entitles them to.

"Cohabitation agreements are similar to a pre-nup," said Gregory. "It can help you divide everything up and they are not that expensive, around £1,200 to £2,000 depending on how complex your finances are.

"More people are financially savvy about the need to protect their interest...and we are seeing more celebrity pre-nups and more people are thinking 'why don't I do that'; you don't need to have millions of pounds to do it."

As more and more people choose to live together – the number of unmarried couples has doubled since the mid-90s to 3 million – Gregory said the law will have to change to provide cohabiting couples with more rights.

"The law is changing and it will change soon," he said.

For more information on your right, check out the Citizens Advice Bureau.

The vital lessons of celebrity divorce
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Cohabitation and your cash: what are your rights

Rupert and Anna Murdoch: $1.7billion (£901m)

Australian Murdoch and his former wife were married for 32 years and had three children together, before splitting in 1999. Around $1.7 billion of Murdoch's fortune went to Anna.

"The divorce rate is rising rapidly among the over-60s - up 58% in 2012 compared with 2011," explains Stowe. "According to reports at the time, Anna wanted her media tycoon husband to slow down – but like many people these days, Rupert didn't want to approach his sunset years sitting in an armchair. Over 60s want to enjoy themselves, making the most of what time they have left by doing what they love best."

Mel and Robyn Gibson: $425million (£273m)

Mel Gibson's 31-year marriage to Robyn felt apart when his mistress and soon-to-be second wife Oksana Grigorieva's pregnancy was made public. Robyn was entitled to half of his assets under California state law and the Lethal Weapon actor reportedly handed her half of his estimated $850 million fortune.

"Robyn's sizeable settlement included 50% of her movie star husband's pension rights," explains Stowe. "My male clients are often displeased to discover that financial negotiations extend to their pensions. They are also shocked to discover that, if the wife is younger than the husband, her claim to a share of the pension can potentially be greater than his because her life expectancy may be greater than his."

Roman and Irina Abramovich: $300 million (£193m)

Roman Abramovich reportedly finally agreed to divorce wife Irina when she could no longer put up with his roguish ways and he refused to give up his mistress. The £150 million payout could have been a lot more painful for the Chelsea FC owner - Irina sought 50% of his $12.1 billion fortune, which if successful would have been the largest divorce settlement of all time by a count of six.

"Most couples, whether or not they are in the public eye, prefer to avoid court and maintain their privacy," says Stowe. "Moreover court proceedings, which pit one party against the other in an adversarial environment, can be unpleasant and stressful. Although $300 million sounds like a lot, Irina Abramovich could have fought for a far greater share of the couple's fortune. By agreeing to settle for less, she was able to avoid an acrimonious court case – and all the public scrutiny that would have come with it."

Tiger Woods and Elin Nordegren: $110million (£70m)

Shamed by the sex scandal that wrecked their marriage, Swedish Nordgren got a reported $110 million settlement from her cheating ex, golf star Tiger Woods. When Nordegren finally ended nine months of silence over her heartbreak in August 2010, she said she "felt stupid" that Woods cheated on her with a parade of party girls and porn stars, and noted: "Money can't buy happiness. Or put my family back together."

"When the rich and famous divorce, the public want details: the juicier, the better," says Stowe. "However it is easy to get carried away by the sums and forget that, even for the most privileged among us, money is no balm for heartbreak."

Steven Spielberg and Amy Irving: $100million (£60m)

The couple, who first met when Irving tried out for the lead role in 1977's Close Encounters of the Third Kind, went onto marry in 1985. According to, when they divorced in 1989, Irving claimed their prenup was invalid because it was written on a napkin without any lawyers present. She successfully won a $100 million settlement.

"Don't assume that a prenuptial agreement isn't worth the paper it is written on: in England and Wales, pre-nups will certainly be considered by the court but are not yet automatically binding, " explains Stowe. "However a prenup is more likely to be upheld if it is consensual and voluntary, not signed in haste, not clearly out of date (providing for future children, for example), preferably including a review after a period of time, and properly drafted with full disclosure."

Madonna and Guy Ritchie: $76m-$92million (£48m-£59m)

When Madonna divorced director Guy Ritchie in 2008 after eight years of marriage, Ritchie was said to have walked away with between $76 to $92 million - almost a fifth of the singer's estimated $500 million net worth, plus a country house and a London pub.

"The settlement rumoured to have been received by Ritchie is thought to have been the largest divorce settlement ever paid to a man, showing that in 2013, it isn't always the wives who get the divorce settlements," explains Stowe. "In recent years I have encountered a number of successful female breadwinners who were bewildered to discover what they faced to lose if they divorced."

Sir Paul McCartney's and Heather Mills: estimated at $48.6million (£28million)

Following their divorce in 2006 Heather Mills was awarded £24.3m in the settlement decided by a court judge. According to the BBC, McCartney paid his estranged wife a £16.5m lump sum, including £2.5m to buy a London property, in addition to £7.8m assets and £35,000 a year for their daughter Beatrice. The settlement was blow for Mills who had sought some £125m of the former Beatle's £400m fortune.

"The demolition of family law legal aid, which provided help with legal costs, has led to a boom in people representing themselves in court," explains Stowe. "Heather Mills represented herself in the High Court – and discovered for herself the disadvantages of doing so.

"In the courtroom, there are no prisoners taken. You may think you are saving money by representing yourself or opting for a cheap DIY divorce online – but such decisions can turn out to be expensive in the long run if you settle for less than you are worth. "

Donald Trump and Ivana Trump; $25 million (£16m)

The Trumps 15-year marriage came to an end in 1992, with Ivana taking $25million in an out-of-court settlement, plus several properties. The couple's old Mercedes proved a major sticking point, which Ivana – who claimed Donald had given it to her as a gift – eventually won.

"I have often observed that clients who are knowledgeable and well-prepared, with a realistic outlook, are better equipped to cope with proceedings and move on with their lives afterwards," explains Stowe. "Ivana Trump has a refreshing attitude and since divorcing has gone on to enjoy considerable success of her own as a real estate developer and as the founder of Ivana Haute Couture, which sells her signature products, fragrances and accessories."

Lionel Richie and Diane Richie; estimated at $20 million (£12m)

Richie married Diane in 1995 and the couple had two children, before their marriage broke down in 2004. The Richie's became tabloid favourites, reports Forbes magazine, as Diane detailed their lavish lifestyle in her alimony petition. Among her claims: a monthly clothing allowance of $15,000; $50,000 a month for manicures, massages and other personal services; and a plastic surgery budget of $20,000 a year.

"Richie rubbished Diane's demand as "a lawyer giving some advice that's completely absurd", and insisted that despite the headlines, the couple still had a "great time" together," explains Stowe. "Perhaps he was right: the couple have remained on good terms and were spotted shoe-shopping together in 2011. It is difficult for a divorcing couple to stay friends, irrespective of the settlement size, but it can be done."

Mick Jagger and Jerry Hall; estimated between $15 and $25 million (£9.6m-£16m)

After nine years of marriage, Mick Jagger and Jerry Hall divorced with a $25 million settlement. According to, Jagger attempted to get out of any payment by claiming they had never really been married because their Balinese Hindu wedding ceremony was not legally binding.

"Their ceremony was invalid because under Balinese law, only Muslim marriages can be validly conducted," explains Stowe. "When a couple's marriage is not valid according to English law, it is still possible for one spouse to obtain a financial settlement – but only if the Petitioner spouse thought he or she had actually gone through a lawful marriage ceremony and acted as married thereafter. If you plan to marry overseas, however, do avoid Jerry Hall's plight by double-checking the law before you leave."

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