A Cohabitation Agreement is a legal contract between unmarried couples who live together. It outlines how financial responsibilities, such as rent, mortgage, bills, and bank accounts, should be shared, as well as how significant assets should be handled in the event of a separation. It may also include provisions regarding the care of any children.
Who should consider one, and when is it a good idea to have one?
Cohabitation agreements are particularly recommended for unmarried couples due to the fact that in England and Wales, they do not have the same legal rights as married couples. For example, the general rule upon divorce is a starting point of 50% share of all marital assets, whereas cohabiting couples do not have the same level of protection. They are typically entitled to only the percentage of a property they legally own. In some cases, they may seek recourse through the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA).
Cohabitation agreements are usually drawn up either when couples buy their first home together, when one partner already owns a property, when there is a noticeable difference in wealth, or when a couple plans to start a family.
Is it worth obtaining a Cohabitation Agreement?
A Cohabitation Agreement is valuable as it clarifies each party’s rights regarding assets and liabilities, especially in the event of a breakup. It can also prevent costly and lengthy disputes in court.
For the agreement to be legally binding, it must meet certain conditions, including the absence of fraud, duress, unfair terms, mistake, undue influence, or misrepresentation. Both parties should have received independent legal advice and disclosed their financial information by way of financial disclosure.
It’s also important to review and update the agreement after significant life changes, such as the birth of a child or a change in financial circumstances. If the agreement is not updated, it may not be enforceable.
What can be included in a Cohabitation Agreement?
- Payment of bills and debts
- Shared assets and contributions
- Child arrangements and maintenance
- Pets
- Use of joint and sole bank accounts
- How assets and property are divided upon separation
What if you decide to marry?
If you choose to marry, the Cohabitation Agreement will likely no longer be legally valid. In this case, it’s advisable to create a Pre-Nuptial Agreement instead.
Further Information
If you would like more information or wish to discuss this topic further, please feel free to contact Monika Brar at JPC Law for a free initial 30 minute consultation.
Email: mbrar@jpclaw.co.uk
Tel: 07787 411255
