Understanding the implications of cohabitation

The 'modern' arrangement of cohabitation rather than marriage is on the increase. Between 25 and 29 is the peak age for cohabitation and older couples are also more likely to cohabit than marry, especially where they have been married before. In 2008 there were 2.3 million cohabitants and while numbers continue to increase, it seems there is definitely a wider social acceptance of cohabitation.

While couples are often advised by others to live together before taking the final plunge, many opt not to marry at all. Nowadays a lavish wedding is seen as a must, so is it the cost that puts people off? Is it due to the increasing divorce rate or because it is easier to get out of if things go wrong, particularly if there are no children?

Or, it is due to the fact that in some quarters marriage is viewed as an outdated institution?  Whatever the reasons, there are financial implications. For the wealthier partner it is better to cohabit rather than marry but the opposite is true for the dependent partner.

For over 10 years English family courts, in relation to a marriage, have regarded the contribution of a homemaker equal to that of the breadwinner. This has made London the divorce capital of the world with people from all over the world trying to divorce there. The same principle does not apply to cohabiting relationships. There is no such thing as the common law wife.

Many people believe that if you live with your partner for five years or more, you automatically accumulate the same rights as you would have if you were their spouse. It may come as a surprise to hear, but this is plainly wrong.

An unmarried person’s rights are significantly affected by whether or not there are children involved. If there are, the dependent (usually the woman) can request funds to support the children but unlike a married woman, has no right to demand money from her ex-partner for herself. Any sum of money awarded to her to purchase a property for her and the children to live in is likely to have to be repaid when the youngest child reaches 18 or finishes full-time education.

This often means that a woman can find herself homeless or having to downsize considerably later on in life. This is particularly harsh if her career has been adversely affected by parental duties.

If a property is purchased in joint names with joint responsibility for the mortgage then the presumption will be that the couple desired to own the house jointly. This presumption does not apply if one party makes greater financial contribution than the other and the court has the power to force an intention upon the couple as to how they wished the house to be divided, even if there is no evidence of them ever having discussed such an arrangement.

This may be particularly difficult for couples to understand when they may have chosen to live together rather than marry for the very reason that they do not want the courts to interfere in their relationship breakdown.

To protect themselves, couples should enter into a cohabitation agreement. These agreements can be entered into at anytime and most commonly cover the family home, financial support post-separation, joint bank accounts, cars and other personal belongings. Although perhaps tempting, it is not a good idea to include provisions as to how to regulate the couple’s sexual relationship or domestic chores as this makes the agreement less likely to be enforced on a relationship breakdown.

They are binding as long as they are properly concluded, like any contract, and they will need to be reviewed if any children are born. Practice shows that they will almost certainly help avoid litigation if the relationship breaks down.

Although a gloomy way of looking at things, it is important that couples choosing to cohabit look at their Wills. If the breadwinner dies and the couple have been living together for two years immediately prior to their death the dependent will be able to make a claim against their estate. It is much easier to have a Will setting out exactly where assets should pass upon death.

In comparison, if a married spouse dies without a Will, all their assets will automatically pass to their spouse. There are proposals for reform that cohabitants who have lived together for five years or who have a child together and have lived together for two years, should inherit as if they were a spouse, but this is still a proposal.

Whatever the reason for cohabiting, you should ensure that if this is the route you choose to take, you sufficiently protect yourself for whatever the future holds, avoiding suffering financially as well as emotionally.

Cora Brown is a solicitor at Charles Russell LLP