Cohabitation Agreements – Protecting your Financial Future
In this article we look at Alan and Bertha, who are unmarried and have lived together for some time.
When they separate, can either bring claims as a Common Law spouse against the other?
In short, the answer is no. There is no such legal concept of the Common Law wife or spouse. It is a social myth that has grown over the years that, if an unmarried couple live together for a long period of time, they acquire legal status through a Common Law marriage. This is not true.
On an unmarried couple separating, even if they have been together for years and had children, neither of them can bring any financial claims (in respect of property , pensions or maintenance, etc.) against the other under Divorce legislation.
Are there any legal claims that either of them can bring on separation?
The answer is, it depends. If they jointly own their home and there is dispute regarding who is entitled to live there or how the sale proceeds are divided, then there are legal remedies. A dispute over ownership would be resolved under Property and Trusts Law.
If Alan and Bertha have children under the age of 18 and Bertha wants to remain living at the home with the children, she could bring a claim against Alan under the Trusts of Land and Appointment of Trustees Act 1996, seeking orders that permit her and the children to remain at the house. We will not go into the issues of such a claim but simply point out that the possibility exists.
Even if, for example, Bertha owned the family home in her sole name, Alan could potentially have a claim in relation to a share of the sale proceeds. However, this would be more complicated as Alan would have to essentially rely on Trust Law, and it would be necessary to look at the details of how the property was purchased, and possibly those of the family life since that time. Again, we will not go into the details of such a claim here, but are simply pointing out the possibility.
Where Alan and Bertha have children then, following separation, claims for maintenance for the children would be dealt with by the Child Maintenance Service, which administers a statutory scheme calculating maintenance according to income and the number of nights the children spend with each parent. Should either Alan or Bertha be high income earners (earning over £156,000.00 gross per year) then it is possible that further claims for top-up maintenance could be made to the Family Court. Such claims are outside the scope of this article.
What happens if one of them dies while they are living together?
Ironically, if Alan and Bertha had not separated but Alan had died after they had been living together for more than two years and he had left nothing in his Will to Bertha, she would be able to bring a claim against Alan’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 on the basis that he has failed to make reasonable financial provision for maintenance for Bertha. This would put Bertha in a similar (but not identical) position as the spouse.
It can be seen that, when an unmarried couple separate and there are disputes between them, there are various laws they can possibly turn to but, unlike separating married couples, there is no single law that can help.
Is there anything that Alan and Betha could have done at the start of their relationship to try and avoid this pick and mix of law?
Yes, they could have entered into a Cohabitation Agreement. This can set out their respective rights and responsibilities in relation to the property they live in and financial arrangements between them both during cohabitation and the arrangements to apply if they separate. The agreement can record who owns what in relation to personal property, such as cars or furniture, and who will be entitled to what should they separate.
In respect of the house they live in, a Cohabitation Agreement can set out their respective interests in the property, who pays the mortgage/rent and bills (shared or otherwise), and what happens if the couple split up – for example, the Agreement can set out that the house is to be sold and how that sale takes place (arrangements for the appointment of estate agents, etc.).
A Cohabitation agreement would allow Alan and Bertha the freedom and flexibility to organise their financial affairs as they wish, both during and after cohabitation. It is possible to try to include a clause that, following separation, one of them is to make payments (akin to maintenance) to the other for a period of time, to allow for the adjustment to single life.
Are Cohabitation Agreements enforceable?
It has to be said that, as Cohabitation Agreements are not created by Statute Law, there have been some reservations about their enforceability. The Law Commission have said that such Agreements are likely to be governed by Contract Law.
It is therefore essential that, when a Cohabitation Agreement is prepared, regard is had to the principles of Contract Law to ensure it does not fall foul of any of them. It is possible that provisions relating to real property (the house) may be more likely to be upheld than, for example, “maintenance clauses”, as there are no statutes dealing with the latter, but there is the former.
Given all the issues that can be covered in a Cohabitation Agreement and the importance of ensuring it is drafted correctly, it is best to take legal advice. Call Elaine Parkes Solicitors now to talk through the options for protecting your finances.
Written by Simon Brown