Why have a Cohabitation Agreement?
Cohabitation agreements can be useful for couples who live together but are not married. They can help to prevent arguments and worries in the future over issues such as who should pay the mortgage, household bills etc., and who owns what.
The unfortunate reality is that relationships can go wrong. In the event of separation, unmarried couples have very little legal protection (the courts do not recognise a "common law marriage"). Cohabitation agreements set out what should happen in the event of separation. In this way, they can help to significantly reduce the costs of dealing with separation in terms of time, stress and money during what can be a difficult time.
Content of cohabitation agreement
A cohabitation agreement can include the following (but couples can choose which of these, and other, issues that they would like to cover):-
- who owns your home, the shares in which you own it and the amount that you each contributed;
- who will pay bills such as the mortgage, utilities, house maintenance and renovation work, food and general living costs and the effect, if any, such payments will have on ownership of the property;
- if there are any endowment policies or other savings or investments, who pays those and how they would be dealt with on separation;
- who pays for any life insurance policies and how these would be dealt with on separation;
- if there is a joint bank account, how much will you each contribute to it and what will happen to it on separation;
- whether you will nominate each other for death in service benefits for your pensions, if any;
- whether you wish to make provisions to cover death, but these should also be confirmed by a will;
- personal possessions can be dealt with by setting out who owns specific items, who will pay and own for future items, etc;
- if either of you have received or expect to receive gifts or inheritances, the agreement can refer to those and make provisions as to their future ownership;
- if parents lend money to assist with a house purchase, who will be responsible for repaying the loan.
In order to be legally binding, your agreement will need to be made into a deed and an advocate can do this for you. It is important that you each take legal advice. The agreement should also include a summary of your current financial circumstances, e.g. assets, liabilities and income for each of you.
Whilst cohabitation agreements can go into as much detail as the couple may wish, some clauses may not be legally enforceable. An advocate can advise you about these.
Spending time and some money at the start of a relationship (or even if a couple has been together for some time) can save a great deal of difficulty in the unhappy event of separation in later years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.