More and more couples are opting to sign a cohabitation agreement to provide clarity and certainty in the event of separation. A cohabitation agreement can help to avoid disagreements over who owns what and who owes what after relationship breakdown.
Unmarried couples do not benefit from the same rights as their married counterparts – even where they have been cohabiting. Should a cohabiting couple’s relationship come to an end, dividing assets can become extremely complicated, adding to the difficulties of the situation.
What is a cohabitation agreement?
A cohabitation agreement (sometimes referred to as a ‘living together’ agreement or a ‘no-nup’ agreement) is a written record of both partners’ agreement as to how they own and share money, property and other assets, including day to day finances, and what will happen to these should the relationship come to an end.
A cohabitation agreement can offer many benefits for couples who live together or plan to live together. For example, where one partner wants to ensure clarity in how bills will be paid and the ownership of assets, or where you want to draw up an agreement that will stand up in court should the relationship come to an end.
Why have a cohabitation agreement?
Living together without a cohabitation agreement in place leaves you with very little financial protection and few rights, should the relationship fail.
As a cohabiting couple, the law doesn’t recognise your relationship in the same way that it recognises marriage or civil partnership. This means that you do not have the same rights as married couples except in respect of jointly-owned property.
Where a married couple have a legal right to their share of marital assets in the event of death, a cohabiting couple does not. Should you move in with a partner and that partner subsequently dies without leaving a will, you have no rights to inherit any part of their estate. You could be forced to move out of your home and lose access to belongings or items that you feel were owned jointly.
What should a cohabitation agreement cover?
Your cohabitation agreement should include, but not be limited to,
- the names and addresses of each partner
- an honest disclosure of each partner’s financial situation including what they earn, what they own, and what they owe
- children – who will take responsibility for them including financially, details of payments received from parents outside the relationship or payments to be made to those parents
- the home you will live in – how is it owned – jointly or by one partner? If owned by one partner, does the owning partner want to prevent the other partner from obtaining any share in the home, or do they wish the other to have a share? What would happen if you split up? Who would the home belong to?
- household expenses – who will pay what? Will there be a joint bank account to pay for these? Who will pay what into the joint account?
- debts – how will responsibility for debts be shared out?
- savings – any savings accounts or ISAs should be disclosed
- contents and personal possessions – who owns what?
- cars and other vehicles – is ownership shared?
- pensions – who will receive this upon your death?
- ending the agreement – if your relationship comes to an end and you wish to terminate the agreement, what is the procedure and conditions?
- future renegotiations – the possibility to review the agreement should circumstances change, such as the birth of a child or one partner being made redundant
- dated signature of each partner, made in the presence of a witness
It is recommended to take professional advice when drafting a cohabitation agreement to ensure you include all relevant assets and property.
Are debts and liabilities included in a cohabitation agreement?
Under a cohabitation agreement, neither partner can be held responsible for any debts or liabilities that the other partner incurs in their name only.
The only joint responsibility will be for debts that are incurred jointly.
Is a cohabitation agreement legally binding?
Cohabitation agreements are legally binding provided they are correctly drawn up, signed and witnessed as a deed.
However, in some cases the courts may review the agreement and determine that it is void, due to the terms being considered objectively unreasonable or where one of the parties entered the agreement through undue influence, duress, or coercion.
When should you draw up a cohabitation agreement?
You can draw up a cohabitation agreement at any time during your relationship – before you move in together or after years of living together. It is important, however, that the agreement is reviewed regularly to ensure it continues to be relevant and reflect your circumstances and wishes.
How much does a cohabitation agreement cost?
The cost to set up a cohabitation agreement will vary depending on what you include in it and your specific situation. As an outline indication, cohabitation prices can vary between £500 and £3000, depending on the complexity of the document.
What happens to the cohabitation agreement if you get married?
The couple can decide whether the agreement continues to apply post-marriage.
The terms of the agreement may also state what happens in the event of marriage. If the agreement says it will no longer apply after marriage, the couple would usually create a prenuptial agreement to ensure they continue to have an agreement in place covering post-separation matters.
Alternatives to a cohabitation agreement
If you decide that a cohabitation agreement isn’t the way to go, then you can have an informal agreement between the two of you written up, but this won’t necessarily be upheld in court.
It is always wise to have a will. Dying intestate (without leaving a will) can mean that your partner has no claim on your joint home or assets if you’re unmarried. Including your partner in your will guarantees what they will receive on your death, and also protects any assets that you wish someone else to have, including the guardianship of your child.
Why legal advice is important
Specialist legal advice can guide you through not only the process of setting up a cohabitation agreement but also advise you in a way that protects your assets and works in your personal favour.
With their experience and professional knowledge, they will be able to assess the benefits and disadvantages of setting up and signing a cohabitation agreement, ensuring that you and your future are protected.
Cohabitation agreement FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing Agency for the Professional Services Sector.
