Co-Habiting Couples

This can vary, deposing on individual circumstances, but common arrangements include:

• How much each party contributes to household bills such as mortgage payments, rent, utilities etc.
• Who owns what regarding expensive assets such as electronics, furniture or cars.
• How joint debts or bank accounts are managed.
• What percentage of a property each person owns.
• Who owns and will take responsibility for any pets if you separate.
• Co-habiting couples should also make sure that they have Wills, as the surviving cohabitee will not be able to rely on the rules of intestacy to protect them.

If a cohabiting couple separates, it may be that a property is owned by both parties or that one party is the sole owner of the property and the other party wants to claim an interest in it. Where there is a dispute as to what the respective parties are entitled to, it is open to either party to apply to the Court for an Order:

• declaring what their respective interests in the property are, and
• an Order for sale to enable the parties to realise their interests in the property.

The Court will want to understand what the common interest was of the parties at the time the property was acquired, and how that has evolved (if at all) over time. There can be no clearer statement of intent as to common intention than a Declaration of Trust, or a Cohabitation Agreement, which has been properly drafted and entered into.

Where children are involved, it may be that, irrespective of what the parties’ respective interests in the property are, it is necessary to make an application to the Court to ensure that the children’s best interests are observed, and that they are adequately housed.

Disputes could be dealt with at mediation or through the collaborative process, without recourse to the traditional approach of matters being negotiated through correspondence and/or through litigation through the Courts.

In the UK, if a cohabiting couple separates, they do not have automatic rights to claim financial support from each other, no matter how long they have been together, even if that support is needed. If they have children, the resident parent can seek child maintenance from the non-resident parent (at rates prescribed, assessed and if necessary, collected by the Child Maintenance Service).

Other differences from legally married couples include:

• Should one partner die, the surviving partner will not automatically inherit anything from their estate – unless the couple jointly own property (subject to how that joint ownership is set up).
• An unmarried partner who stays at home to care for children cannot make any claims in their own right for property, maintenance or pension sharing (although they may be able to make a claim in respect of and on account of the child(ren)).
• Cohabiting partners cannot access their partner’s bank account if they die.
• There can be no pension share between cohabiting partners.

Until there is a change in the law, co-habiting couples should document their financial arrangements, both during their relationship and in the event that they separate, in a ‘Cohabitation Agreement’ also known as a ‘Living Together Agreement’, or ‘Declaration of Trust’.

No matter how long you live with someone, if you are not married, you will not acquire any legal rights or protection as you would if you were married.

Unmarried partners are not automatically entitled to a share of their partner’s assets, such as the property they share as a home, even if they’ve lived together for many years. If a person has lived in a property owned by their partner, the owner will retain their control over the property, and they will have to move out if the relationship ends.

However, a person could potentially claim a beneficial interest in property if they can prove they significantly contributed to it financially (e.g. mortgage payments, money for renovations).

While some married couples can claim spousal maintenance, there is no such legal right for unmarried couples, and they cannot claim financial support for themselves. Generally, if a non-married couple split up, each person retains what is in their name, and joint assets are divided based on how they are held by law, unless another intention can be proven.

If a couple have children together who are under the age of 18, it is possible for the resident parent to make a claim for child maintenance from the non-resident parent (at rates prescribed, assessed and if necessary, collected by the Child Maintenance Service).

Cohabiting couples do not automatically have inheritance rights if their partner dies without a Will. However, if the surviving person was financially dependent on their partner or had been in a relationship with them and they had lived together for at least two years, they may be able to make a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

Any claims for financial provision must be made within six months, usually from the time Grant of Probate was given.

The Court will make a decision regarding any claim under the Act and will take numerous factors into consideration whilst deciding if a) a claim is valid and b) what amount of provision would be reasonable. These factors include:

• The cohabiting partner’s financial resources and needs.
• The financial resources and needs of any other relevant party and beneficiaries.
• The deceased’s obligations and responsibilities towards the cohabiting partner and beneficiaries.
• The size and nature of the net estate.
• Any physical or mental disability of the cohabiting partner or beneficiaries.
• The conduct of the cohabiting partner or any other person.

If there is a valid Will and the cohabiting partner has been named as a beneficiary, they will be able to inherit based on the terms specified, but they will not benefit from the same inheritance tax benefits as married couples. Married couples can transfer assets tax-free between them if one of them dies, but unmarried couples must pay inheritance tax on any portion of an estate exceeding the nil rate band, which at the time of writing is £325,000. Any assets over this figure will be taxed at 40%.

If the couple bought a property together, they would usually share ownership as either joint tenants (where ownership passes to the surviving partner) or tenants-in-common, where each partner’s share can be left to someone else in a Will.