As marriage rates continue to decline in England and Wales, it is important to recognise that there is currently no legal framework in place recognising the needs of cohabiting couples if their relationship breaks down.
It may be surprising to some that cohabiting couples do not enjoy the same legal rights as married couples and that the concept of a ‘common law marriage’ is, put simply, a myth. This misconception can unfortunately cause difficulties and potentially financial disaster for a dependent cohabitee that relies on such a concept.
What rights do I have as a cohabitee?
If you live with someone who owns a property solely in their name, they are considered to be the only legal owner of that property. However, as an unmarried partner, you may be able to challenge this assumption.
By just living together or having children together, this does not automatically grant you rights to the property. To claim an interest in the property, you need to establish a claim, which involves providing that you have a “beneficial interest” in the property. There are three ways to establish such an interest in a property: -
- Express Trust – This is a written agreement that outlines the intentions regarding the ownership of the property, often included in the property transfer documents.
- Resulting Trust – This occurs when you directly contribute to the property’s purchase price. Your share in the property will usually be proportional to your financial contribution.
- Constructive Trust – This can be implied if the property is not registered in both names, and if the owner of the property encouraged you to make sacrifices, or investments based on the belief that you would gain a share in the property.
It is therefore important for cohabiting couples to take steps to protect their financial interests, should their relationship break down, to try and avoid any uncertainty.
How can I protect my financial interests?
If you are purchasing a property with your partner or moving into a property which they already own, consideration should be given as to what, if any, financial contributions you are going to be making and furthermore, how the proceeds of the property will be divided following a sale. Such agreements can be recorded in a Declaration of Trust.
A Declaration of Trust sets out how the property is owned and in what shares it is owned. This should remove any potential uncertainty or dispute in relation to the ownership of a property if you separate.
Alternatively, couples can agree to enter into a Cohabitation Agreement which can cover both financial and child arrangements. These agreements record a couple’s intentions, should the relationship break down, of how they intend on dividing their assets and can be helpful evidence before a court in the event of a dispute.
Such agreements can be entered into at any time during a relationship and are not limited to the commencement of cohabitation.
Finally, by making or updating your Will, this ensures that your share of any property or other assets are passed on to whom you intend after your death. If you are unmarried and die without making a Will, there is no automatic presumption that your assets should pass to your cohabiting partner, as there is for married couples.
If you have any questions in relation to the above, please click here or email the family team at bpe@bpe.co.uk.
