Cohabitation Agreements
Almost every family begins with the two people deciding to live together first, and for some couples this period of life can be rather prolonged. In case of separation or death of one of the partners, disputes related to common assets or children can arise. For such occasions a specific legal instrument exists, so let us study what a cohabitation agreement is, when and how it can be entered into, and what are its key advantages.
A cohab agreement (often referred to as a living together agreement) is designed for adult couples who live together or are planning to do so. This legal document regulates their relationship until the moment of their official marriage or separation.
Such a contract is optional and may include various provisions related to property ownership, financial responsibilities, savings, child care, etc. Generally speaking, it can set out everything that partners wish to regulate in order to be legally protected should their love affair fail.
What are the advantages?
Contrary to what many people think, cohabitation does not make you and your partner a couple in legal terms. Cohabitees have almost no legal protection compared to married couples or those who choose a civil partnership.
Yet, in today’s world, our life is deeply penetrated by numerous financial and property issues, and when two people start living together, such issues inevitably affect each of them. A cohabitation agreement for unmarried partners is a good way of protecting one’s assets and rights while preserving personal freedom until you make up your mind whether an official union shall take place.
Another reason is that in case of separation many affluent couples plunge into cumbersome court proceedings that are both time-consuming and costly. Legal agreements for cohabiting couples allow sparing a lot of money, and there is no risk of having to compensate for legal expenses incurred by the other party if you are unsuccessful in court.
Finally, such a contract helps to avoid misunderstandings and mutual complaints that often arise when the two people move in together. By openly speaking about your financial preferences and listening to how your partner desires to arrange your cohabitation, you are more likely to have a smooth and trouble-free relationship.
What to include in a cohabitation agreement?
Such a legal document can cover any of the following elements:
- property ownership;
- earnings and investments;
- share of living expenses to be paid by each partner;
- bank accounts;
- insurance;
- movable assets (cars, furniture, jewellery);
- child support;
- debts and other financial liabilities;
- inheritance and wills;
- pensions (for elderly or disabled partners);
The most essential part of any such contract is current property ownership. Partners shall set out what they own before moving in together, since this will remain their personal assets that cannot be claimed by the other cohabitee. However, if one partner, for instance, helps the other to pay mortgage, he or she shall become entitled to a share in such real estate, and the same holds for introducing a considerable improvement to the partner’s house (extension, repairs, or buying new homeware).
Another crucial issue is future property. If a home or some other asset is purchased while living together, it is better to agree whether the property will be registered in the name of one partner only, or the partners will become joint owners. In the latter case, the future destiny of such property in case of separation shall be set out (whether it should be sold, or it will be owned by one partner while the other will pay certain compensation).
Rent and household bills should also be provided for in a cohabitation agreement. Determine responsibility for paying bills, food and other joint expenses. Most couples prefer that such expenses are split in equal parts.
A cohabitation contract shall include terms related to children. In case a kid is born while you remain an unmarried couple, parents will definitely like to choose in what shares they shall split child maintenance, and who the baby is going to live with if the parents fail to form a family. By the way, if you or your partner already have a child that was born in a previous relationship, you might need to agree whether both cohabitees shall be responsible for supporting the minor or only his or her natural parent.
It is also wise to include health and insurance issues into your cohab agreement. State whether you have individual or joint health insurance policies. Include any life insurance policies and the designated beneficiaries. Outline the decision-making process for medical emergencies.
Are cohabitation agreements legally binding in the UK?
Yes, a properly executed agreement is an official legal document that will be taken into consideration by the court. To have such a contract, parties shall seek legal advice from a cohabitation agreement lawyer, so that the document covers all the relevant issues and contains legally valid wordings. Besides, the partners should be honest with each other and should conceal no facts about their assets and money.
When is it better to enter into an agreement?
A cohabitation contract can be entered into at any time, but couples are advised to do so before they move in together. Others prefer executing such an agreement when they cohabit already but plan on making an important decision (for example, taking a mortgage, buying a car, or having a baby).
Can a cohabitation agreement be modified?
Yes, such a contract can be modified while it is already in effect if the partners’ life circumstances change. Most often, this happens in the following cases:
- a new property appears (for example, as a donation or inheritance);
- a child is born;
- a close relative becomes seriously ill (you might need adding new expense distribution to you cohab agreement);
- the couple moves to another country.
Moreover, a cohabitation agreement may not be valid anymore if you do not bring it in line with your changed circumstances. That is why in many cases an original contract contains a provision stating that any new facts or acts shall be reflected in the document within a specific time from the moment they arise. Generally speaking, any financial, property or legal change that may affect your cohabitation contract is the reason for visiting a solicitor.
What is the difference between a prenuptial agreement and a cohabitation contract?
A prenuptial (or a pre-civil partnership) agreement is designed for couples who intend to get married (or to become civil partners) in the near future. To qualify as such, they must be engaged, know the exact date of their wedding, and be actively preparing for it. A pre-nuptial agreement is typically used by couples who are not satisfied with what they would be entitled to in case of divorce and would like to arrange their future life in a more convenient and profitable way.
As for a cohabitation agreement, it is normally used by partners who have no official plans with regard to their relationship and intend to live together only. This legal instrument is more flexible and contains no reference to the upcoming marriage (or civil partnership). However, if the cohabitees plan to get married in several years’ time, they still can enter into a cohab agreement since such contracts are suitable for any couple living together, regardless of their future marital status.
What is the difference between a cohabitation agreement and a declaration of trust?
A declaration of trust deals exclusively with property-related issues. It sets out who holds the property or its portions, who contributes to paying the mortgage or introducing home, and who will obtain the proceeds if the property is sold in the future.
A cohabitation agreement is a wider legal instrument. It covers not only the above-mentioned matters but also daily expenses and organisational issues. In such a contract, the future state of affairs is linked not property deeds as such but rather to a possible breakdown of the relationship.
How to make a cohabitation agreement?
Templates are widely available online, so you can draw up a contract on your own. However, each cohabitation agreement should be case-specific and tailor-made, otherwise you risk making it too general or missing something out.
If you are reflecting on how to get a cohabitation agreement, the best idea is to consult a qualified solicitor. They will explain all the cohabiting legal rights, ask you questions about your financial situation, and help prepare a legally enforceable contract that will serve as your reliable protection in case you eventually decide to split up.
How much does a cohabitation agreement cost?
The cost of drafting a cohabitation agreement varies depending on several factors, such as the complexity of the case, the qualifications and experience of the lawyer, the scope of services provided, the time and effort involved in drafting the document, the number of required revisions, and any additional services, such as financial advice or mediation. However, any non-marital cohabitation agreement will definitely be less costly than a potential legal wrangle.
To get a more accurate estimation of your cohab contract, you are invited to submit a request on our website, and we will contact you soon for a free consultation.
How can we help?
Sterling Law is an experienced law firm that offers a full range of legal services for couples (either married or no). We have a large expertise in dealing with family issues, so you can entrust us with drawing up a divorce or cohabitation agreement of any degree of complexity.
Among the advantages that our customers obtain, there are:
- transparent and honest approach;
- due regard to both partners’ interests;
- clear terms and wordings;
- prompt execution of legal instruments.
If you need to consult cohabitation agreement solicitors, do not hesitate to contact Sterling Law. We offer detailed professional consultations and help unmarried couples arrange their property-related and financial issues in the most prudent and profitable way!
