Cohabitation law reform has been a pressing issue on the political agenda in England and Wales for years, with family lawyers consistently advocating for change, as they have recognised the growing trend of cohabitation as an alternative to marriage.
However, as more people choose to cohabit, many remain unaware of the significant legal differences between marriage and cohabitation, especially when it comes to financial protection and property rights.
The misconception of the ‘common law marriage’
A common misconception among many cohabiting couples is the belief in the existence of a ‘common law marriage’. It is often thought that simply living together for an extended period creates legal rights similar to those of married couples.
However, this is not the case. In England and Wales, there is no such thing as a ‘common law husband or wife’.
Regardless of the length of time a couple has lived together, cohabiting partners do not have the same legal rights as married couples. This lack of protection becomes particularly evident in situations where a cohabiting relationship ends.
When a married couple divorces, they have the protection of the financial claims available under the Matrimonial Causes Act 1973. This law provides a framework for dividing assets, including property, savings and pensions and can also require one spouse to support the other financially by way of maintenance.
In contrast, cohabiting partners have no such automatic rights. If the relationship breaks down and the parties own a property together, the division of the property is governed by trust and property law, which may not take into account factors such as contributions made by the parties or their future needs.
The importance of legal protection for cohabiting couples
Given the lack of automatic legal protection, it is crucial for cohabiting couples to take proactive steps to protect their financial interests. One of the most effective ways for cohabiting couples to protect themselves is by entering into a Declaration of Trust when buying a property together.
This legal document clearly defines the beneficial interest each partner has in the property, specifying how the net equity will be divided if the property is sold.
A Declaration of Trust is particularly important in situations where one partner contributes more to the purchase price, mortgage payments, or property improvements.
Without this document, there may be a presumption of equal ownership, which could lead to disputes and financial loss if the relationship breaks down.
In addition to a Declaration of Trust, couples can also enter into a Cohabitation Agreement. This agreement can cover a wide range of financial and practical matters, including the payment of bills, ownership of cars and other assets and the treatment of debts.
By entering into such documents, couples can avoid the stress and cost of litigation if their relationship ends.
The role of pre-nuptial agreements for cohabiting couples planning to marry
For couples who are cohabiting but planning to marry, a pre-nuptial agreement (pre-nup) can be an essential tool.
While pre-nuptial agreements are often seen as unromantic, they play a crucial role in protecting individual assets and wealth in the event of divorce. For a pre-nuptial agreement to be upheld by the court, the overriding objective is that it must be fair.
If one or both parties have pre-acquired wealth or anticipate inheriting substantial sums in the future, a pre-nuptial agreement seeks to ensure that these assets are not considered part of the marital acquest in the event of a divorce.
How can Morr & Co help?
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