Married couples and those living together in a civil partnership enjoy certain legal rights. At the moment, there are also over 4 million couples living together in cohabitation without any official legal status. Incorrectly, the vast majority of cohabitating heterosexual and homosexual couples believe that their rights are automatically protected by law in case of a relationship breakdown.
However, the reality is that the English law does not currently recognise the concept of common law partners. Consequently, before you move in together you should be aware of the lack of legal protection and take certain steps to secure your own rights, especially in the case of assets.
Common Law Partners: The House
For a vast majority of people their house is the most valuable asset. As opposed to married couples or those in civil partnership, common law partners have no rights to their partner’s property or to maintenance if their relationship breaks down. The basic principle is that each person owns their own assets and whatever is held jointly needs to be divided, but this is often easier said than done, especially if, whilst living together, contributions towards assets are variable or uneven in a medium to long term arrangement.
In English law, properties can be held in joint names, either as joint tenants or tenants in common. In the case of joint tenancy the presumption in law is that the equity in the house will be divided equally between the joint tenants. Tenancy in common provides a more flexible solution by which tenants can hold unequal shares (i.e. 25% and 75%).
Where only one cohabiting partner owns the property in their sole name, the other partner will not be entitled to any share upon separation; unless they can prove that both parties had a mutual intention of sharing the property in some shareholdings. This can usually be established through:
- Direct contribution towards the purchase price;
- Regular contributions towards mortgage instalments, household bills and costs of refurbishment;
- In certain circumstances acting to your own detriment such as (selling your own house).
The best advice for unmarried couples that are planning on living together is to simply enter into a contractual arrangement, often known as a cohabitation agreement, setting out distribution of assets and division of responsibilities in the case of relationship break down.
Living Together Agreement
Living together agreement known also as cohabitation agreement can provide a certain level of financial clarity and security for those who would like to commit into a relationship without being married. The agreement may not seem as the most romantic idea in the world, but certainly it is not an uncommon measure and if approached in the right manner should not badly impact on your relationship.
Also, couples planning on marrying each other often enter into so-called prenuptial agreements. The common law partners’ agreement should address the issues of assets ownership (including the house) and responsibilities towards debts and expenses of living together. Common law partners who have children should also address this specific point in the cohabitation agreement or consider a separate parental responsibility contractual arrangement.
Most importantly, in order to be legally enforceable the agreement should be signed by both common law partners after consultation from separate legal advisers. If you later decide to marry please also bear in mind that the agreement can be taken into account in any divorce proceedings.
Cohabitation and Death
Since common law partners do not enjoy the same rights as married couples it might be an unpleasant experience to find out that your common law partner’s estate will not pass to you upon his/her death. In the absence of a will, the following rules will apply:
- Any assets held as joint tenants will be passed to you in accordance with the rule of survivorship. This is most likely going to include joint bank accounts and/or the house;
- Any remaining estate will be distributed in accordance with the rules of intestacy. Under the rules of intestacy any of the deceased’s dependents that might reasonably have been expected to be included in the will can make a claim. This may mean that you as a common law partner will receive only a small proportion of the estate or in the worst case scenario will receive nothing.
The best advice regarding this matter is to ensure, in a long term relationship, that each of you makes a will and provides specifically for the other.
For confidential help and an initial free discussion to clarify what you may need to do, please get in touch.