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The urgency to reform cohabitation laws has never been greater

05/02/2019 Deborah Jeff, partner and head of family, Seddons,

Last week Penny Scott, the chairwoman of the Law Society of England and Wales Family Law Committee, said it is “vital” that the myths around "common law" marriage rights are dispelled. "Common law" marriage has no legal status and if the couple decides to separate, the division of finances, property and debts can be complicated.”

It’s now eleven years since the Law Commission recommended that action is taken to give cohabiting couples greater protection should their relationship end, yet we are still without change. It is often women who are most affected by the commercial reality that when their relationship ends, they are left without financial protection if they have been the homemaker on a full time or part time basis.

Around one in eight adults in England and Wales now lives unmarried with a partner. At least six million couples, or 12 percent of us, have for whatever reason chosen to reside together in an enduring relationship but without the protection and responsibility that marriage brings.

So where are we at present?  What rights do and don’t cohabiting couples have?

Liberal Democrat MP Lord Marks of Henley-on-Thames proposed a private member's bill, the Cohabitation Rights Bill 2013/14, which reached Committee Stage in the House of Lords but was abandoned by parliament before the general election in 2014. That Bill was re-introduced and had its first reading in the House of Lords in June 2015. But it was kicked into the long grass again until it emerged as the Cohabitation Rights Bill 2017/19 and had its first reading in July 2017. A second reading date is still awaited 19 months later.

Current law

Currently the law does not recognise or value the non-financial contributions unmarried partners make to family life, or the financial sacrifices that might result from staying home to care for children.

Assuming the couple haven't taken advice at the outset and clarified their respective financial and legal positions, a client's case is typically argued within the following structure:

a. The Trusts of Land and Appointment of Trustees Act 1996 (‘TOLATA’) – to qualify their respective beneficial interests in property purchased together in joint names as beneficial tenants in common when there is no supporting declaration of trust stating such interests;

b. Schedule 1 of the Children Act 1989 (‘Schedule 1’) – to effectively borrow capital from the other parent to help meet a capital need of the children during their minority; and

c. Child Maintenance Service – to claim maintenance for the children, also using Schedule 1 CA1989 to claim top up maintenance and school fees orders where appropriate.

For the greatest protection, ideally, the cohabiting couple will have taken advice before they live together, addressing how the property is to be held and preparing documents in support:

1. How the property will be legally held

Issues to consider include:

- will both parties be making financial contributions to the property, both by way of capital and mortgage repayments?

- will these arrangements be reflected in their respective shares in the property?  For example, will it be owned 50:50 or in some alternative proportions?

- if they will hold the property in joint names, is it intended they will inherit each other’s shares on death?

- how should any improvements to the property be funded and how will this impact upon the parties’ shares (if at all)?

- if one party pays a lump sum off the mortgage will this have an impact on their respective shares?

- in what proportions should each party contribute towards other outgoings for the home?

Any agreement regarding jointly held property should be supported by a cohabitation agreement and, for property in joint names, a declaration of trust.

2. A Declaration of Trust

Once it is decided in what proportions property will be owned, the terms should be confirmed in a declaration of trust, clarifying the shares both parties have in the property and what has been agreed at the outset.

3. A Cohabitation Agreement

This is a legally binding contract which sets out how you are going to run your finances as a couple during the relationship and what will happen financially if you separate. It is the equivalent of a prenuptial agreement for cohabiting couples. Most importantly, it is a clear expression of intentions.

The types of matters covered by a cohabitation agreement include:

- confirmation of how property is owned, supporting any declaration of trust;

- how household bills will be divided;

- whether the couple will have a joint account or joint credit cards;

- who is to be responsible for any loans obtained for the benefit of the family; and

- what the arrangements will be on the death of either party. 

It gives both parties clarity and places on record what the arrangements are, avoiding the possibility of expensive litigation in future.

4. Making a Will 

If one party is being maintained by the other, or once they have lived together for two years or more, cohabitees have claims against each other’s estates upon death. Wills should therefore be made supporting the terms of the cohabitation agreement to ensure such wishes are followed.

Whilst the government has had pressing issues to address elsewhere of late, the urgency of reform of our cohabitation laws has never been greater. The time has come for family law to catch up with how we are living our lives, accompanied by the realisation that it is not only those who marry who need protection of the state in their family lives.

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