During the current third lockdown period many individuals may not have the financial power to proceed with divorce & financial proceedings due to either losing their jobs due to the current Covid19 pandemic or being placed on furlough. The Family court’s position is that those proceedings must continue without as much interference or delay as possible. Similarly, during lockdown many couples are still purchasing properties together. This lockdown shouldn’t put a stop to unmarried couples having a contractual agreement between each other to decide how their finances and properties should be split, should their relation end.
Talking about the end of your relationship while you’re still living with your partner might feel awkward or unromantic especially during the Covid19 lockdown, but it’s just as important as writing your Will or purchasing that new property. Knowing your rights and safeguarding your assets will make for a much smoother time if things do come to an end whether it is amicable or not.
If you plan to move in together, or have already done so, taking the time to talk about important issues with your partner early on should help set your mind at ease, and, done properly, may actually strengthen your relationship.
Married, common-law or civil partnership?
There is a common misconception when you cohabit with your partner that you have the same rights as a married couple. Actually, your legal rights and responsibilities are different, no matter whether you have been together for months or years. So, what’s the difference?
When you choose marriage or a civil partnership, you’re entering into a legal relationship, which is a binding contractual agreement. There are laws to provide guidance in the event of a divorce/dissolution of marriage that helps with the management of assets and providing for children, in addition to other things.
If you’re living together, also more commonly known as ‘cohabiting’, there’s no formal or legal arrangement. You may refer to your partner as a common-law spouse, however this does not provide you with any additional legal protection, which a married individual may have.
When a cohabiting couple agree to separate due to the relationship breaking down, issues around property, children, and other assets may be far more complicated, all of which can add up to time-consuming and expensive legal proceedings.
For example, consider a longstanding cohabitation between this unmarried couple Mr. Smith and Ms Brand. Ms Brand stayed at home to raise the children and care for the family home, which they own jointly. The parties decided that it would be more progressive if Ms Brand stayed at home and not develop her career in Medicine, while Mr Smith worked full time and would bring in more of a wage income, resulting in him being the bread winner. Mr Smith worked to provide for them and to build his career. When they separated Ms Brand would have a claim against the house. However, it is unlikely she can claim against any pension built up by Mr Smith during the time she supported him in his career and may have no alternative resources for her own retirement.
Legal agreements for cohabiting
You don’t have to get married or enter into a civil partnership to safeguard your rights and assets. One alternative is to enter into a Cohabitation Agreement. This is a legal agreement legally binding both parties which are recognised by the courts.
As well as agreeing what you will do with your finances if one of you becomes ill, dies, or you separate, you may also lay out guidelines for more mundane issues such as how household bills and mortgage payments are divided to protect assets you owned before cohabiting.
For example, Ms Brand buys a house and has been paying the mortgage for many years, before Mr Smith begins to live with her. After moving in, Mr Smith provides her with a monthly payment as a contribution to the household. After separating, Mr Smith claims a share of equity against the house, stating that he was contributing to the mortgage. Ms Brand is now potentially facing a lengthy, costly, and emotionally exhausting court battle. If they’d entered into a cohabitation agreement, this probably could have been avoided.
Legal advice for Cohabitation Agreements
A Cohabitation Agreement is legally binding. Before you enter into one, or are considering looking into preparing an agreement, you should always get legal advice first. Your solicitor will consider your individual circumstances and help you to decide what should be added. This may include responsibility for any children, and the distribution of personal possessions.
It’s important to remember that your circumstances may change in the future. As well as establishing an agreement for your current lifestyle, your solicitor will prompt you to look at a review of the agreement after major life changes such as having children or being made redundant.
Your solicitor will also advise you about any issues that are not included in the agreement. Unlike married couples, cohabiting does not automatically give you any rights to inherit assets. Therefore, you may need to write a Will, and consider any implications of inheritance tax.
Starting the conversation
A cohabitation agreement really is a practical arrangement that provides certainty and security for both parties. We understand that you may feel awkward in bringing the subject up with your partner. Your solicitor can advise you on how to approach the topic in a constructive way.
If you’d like to put some protection in place, or need to understand your rights, LDJ Solicitors offer a free 30-minute appointment to gain an overview of your position and provide some practical advice. This consultation is given without obligation.
Our Nuneaton and Hinckley offices cover East Midlands, West Midlands and Warwickshire. Contact a member of the Family department on (01455) 637030 or (02476 745000) to make an appointment today.
Written by Mr Sunny Sidhu, Family Solicitor.