More and more couples are choosing to cohabit (live together) outside of marriage. The laws for unmarried, cohabiting partners are not the same as those for married couples in that they have no automatic right to their partner's income or assets upon separation.
At present, the only solution for cohabiting couples seeking legal protection is to enter into a Cohabitation Agreement, also known as a "No-Nup".
What is a Cohabitation Agreement?
Essentially, it is an Agreement which sets out who owns what and in what proportion. A Cohabitation Agreement documents provisions for children, and how you will divide your property and other assets should the relationship break down. It can also be used to clarify the day-to-day management of finances.
Are you purchasing a property?
The family home is often the main and most valuable asset of a relationship. Parties can hold a property as joint tenants, tenants in common, or in one party's sole name.
If purchasing the property as joint tenants, each person takes half of the equity upon separation. If one person passes away, the survivor inherits the whole property.
If purchasing the property as tenants in common, the property is held jointly but as separate shares. If one person passes away, their share will only pass according to their Will.
Where ownership of family property is in the sole name of one party, it is usually a sensible precaution to enter into a written Agreement to define and secure the financial interest of the non-owner who otherwise could be entitled to nothing.
Do you have children?
Depending on the circumstances, one parent may be able to claim maintenance, a lump sum, or property rights against the other on behalf of a child.
The parent who is not living with the child may be required to pay child support via the Child Maintenance Service unless maintenance is agreed. A Cohabitation Agreement can be utilised to record the parties' financial obligations and intentions towards children of the relationship upon breakdown.
Pensions
Occupational pension schemes often do not recognise cohabiting partners. A pension is only paid to a surviving unmarried partner if they can prove financial dependence on the scheme member. A specific nomination may also be required by the scheme member for the other party to benefit. Cohabiting partners also have no rights over state pensions.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.