Cohabiting couple families are the fastest growing family type – they are the modern family. The latest figures tell us that the number of cohabiting couples more than doubled between 1996 and 2016 from 1.5 million to 3.3 million, and this number is anticipated to continue to grow. It is, therefore, important to consider the implications of this modern family dynamic in the event that the relationship breaks down.
Many people believe that by living with a partner, in a manner akin to husband and wife, or having children with them, they are automatically entitled to a share of the other’s wealth or to claim income from them when the relationship breaks down. That is a myth and not true.
Upon the breakdown of a marriage/civil partnership the court’s intention is to divide the family assets, regardless of who owns them, in a fair manner to try to meet each parties’ needs and those of the children. Often this can involve the total assets being divided equally.
By contrast, if people are cohabiting and their relationship breaks down then they are only entitled to:
- Any assets held in their respective sole names;
- Their share of any assets held in joint names, which may need determination by the court if not specified; and
- If they have children, a more limited claim could be made for financial support for the benefit of the children either via the Child Maintenance Service or under Schedule I of the Children Act 1989. This is much more restricted and based on the needs of the child, not fairness.
Cohabitants do not have an automatic entitlement to a share of any assets owned in the sole name of the other, which could include the home in which they live, nor to maintenance. Therefore, when the relationship breaks down, the financially weaker person could be left without a home and without funds to purchase or even rent a new property, or sufficient income.
There are exceptions to this and it is possible that one person may have acquired a beneficial interest in the property of their partner which could lead to a financial claim being made. You should take specialist advice to see if this applies to you.
Cohabitants also do not have automatic rights against their partner’s estate on death as spouses do. Therefore, if their partner dies and has not left a provision for them in a Will it may be harder to make a claim against their estate.
What can a cohabitant do to protect their financial interests?
- Ensure that property and assets are purchased in joint names. It is recommended that a declaration of trust is entered into when purchasing property to set out each person’s interest in it.
- Enter into a “living together” or cohabitation agreement. If signed as a deed this will be binding. It will set out what provision each person will make to the other or for the benefit of any children upon the breakdown of the relationship, the intention being that such provision will be more generous than the law otherwise allows to cohabitating couples. At Burgess Mee, our specialist lawyers can prepare these at modest cost.
- Create mirror Wills making financial provision for the other in the event of death and take independent financial advice on how to protect one another.
The House of Lords is currently considering a Cohabitation Rights Bill which seeks to provide greater rights to cohabitants to make financial claims against their partners on the breakdown of the relationship. However, this is still in its early stages.
Until such time as cohabitant rights are enshrined in law and with around 1 in 5 families now representing this modern family dynamic it is essential that cohabitants take specialist advice as to how best to protect their financial positions in the event their relationship breaks down.
For further information please contact us at firstname.lastname@example.org or on 0203 824 9950.
You can also visit the Resolution website which supports the campaign for greater rights for cohabitants: http://www.resolution.org.uk/Cohabitation/.
Written by: Robert Micklem