Recent figures from the Office for National Statistics show that the number of cohabiting couple families in the UK doubled from 1.5 million in 1996 to 3.3 million last year. While married or civil partnership families remain the most popular type of family arrangement, these figures show that cohabitation is not just on the rise but swiftly gaining in popularity. It’s important to note that cohabiting couples don’t have the same rights and interests as married couples. For example, the entitlement to claim for maintenance or a share of assets. So what can couples do to protect themselves? The answer lies in the cohabitation agreement.
What is a cohabitation agreement?
It is a document entered into before moving in together that sets out the rights and responsibilities of the two parties to the relationship. It covers three key areas that otherwise would remain unprotected:
Property - the property in which you live together, how it is to be paid for now and what will happen to it if the relationship breaks down. For example, if Partner X moves in to a home owned solely by Partner Y and then 10 years later they split up, Partner X has no right of ownership of the property even if they have contributed directly to the mortgage or contributed in other ways, such as staying at home with the children so Partner Y could go out to work.
Finances - what the financial arrangements will be while you’re living together – and if some day you’re not. This could cover any split in mortgage payments, who pays the credit card bills and who owns the car. In the event that the relationship comes to an end the cohabitation agreement will have set out exactly how all money and assets will be divided, from savings to furniture.
Breaking up - the process that you’ll follow if a split does occur. It may sound pretty unromantic to start thinking about this before you’ve even spent a night in the same bed. However, anyone who has been through a break up knows exactly how bewildering this can be and a set of established steps to follow can be quite a relief. It also reduces the scope for arguments – e.g. who gets the dog – and ensures that there is certainty if there are children involved.
Is a cohabitation agreement worth having?
There are many reasons why a cohabitation agreement is a beneficial option for couples who want to live together.
Reducing property ownership disputes
You’ll know exactly who owns the property, and in what shares. Recording both party’s legal and beneficial interest in the property means you can avoid one of the biggest areas of dispute for separating couples.
Protecting loaned cash
This is the kind of money that has come from family members to a grown up child who is one partner in the relationship e.g. the deposit for a home. A cohabitation agreement ensures that, if there is a split, the investment remains with that child.
Providing for children
The cohabitation agreement can cover arrangements for children if a relationship breaks down. In particular, it is often used to set out arrangements for financial support.
Certainty is not something that most relationships have – at any time, but especially during a break up. With a cohabitation agreement there is financial certainty and the parties have control over what happens to their individual property and assets.