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.

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