On 25 January 2024, the Office for National Statistics reported that the proportion of people aged 16 years and over living in a couple who were cohabiting (not in a marriage or civil partnership) increased from 19.7 per cent in 2012 to 22.7 per cent in 2022, equivalent to 5.4 million people in 2012 and 6.8 million people in 2022.

This surge in number is reflective of the rocketing number of cohabiting couples and yet couples who live together without being married have very few rights when it comes to finances, property, and children.

In England and Wales, the concept of a common law husband or wife is in fact a misconception. The law of England and Wales does not recognise people living together as being in a legal relationship – meaning unmarried couples are exposed to huge risks if the relationship breaks down.

In this article, family partner Claire O’Flinn outlines the legal protection available to cohabiting couples when issues arise involving money, wills, and property.

Is a cohabitation agreement necessary?

Cohabitation agreements, or living together agreements, are essentially like prenuptial agreements but without the wedding, the dress and the cake. You may also hear them called “no-nups”. These agreements set out who owns what and in what proportion and give couples the freedom to decide how they intend to split their property and assets should the relationship end. They can also be used in a more positive way to record how the relationship will work, such as who will pay for the mortgage, the holidays, refurbishment, or renovation of the property, and whether they intend to take out life insurance or make a will.

The importance of financial planning

Many people choose to keep their banking arrangements separate from their partner, but this is often because it’s easy, or just habit, rather than an actual informed decision.

While having separate accounts means you are only accountable to yourself, and your partner has no access to it, issues may arise if one partner dies, as the other has no access or entitlement to the account. Any balance will be the property of the deceased partner’s estate.

Having a joint account allows both partners the ability to access it. However, if the relationship ends and there is no agreement on how to divide the account, a court might have to become involved. This option is more secure as if a partner dies, the survivor becomes entitled to the balance (subject to calculating the value of the estate of the deceased partner).

Some couples may opt for a joint savings account and individual current accounts but this is a personal decision, unique to each couple.

Who is liable for the debt?

Cohabitees are liable for all debts that are only in their own name.

However, with joint debts, there is a risk that both partners are responsible for the whole of debt regardless of whether it is in joint names and for other debts for which there is a ‘joint and several’ legal responsibility.

If one partner has a debt for which the other acted as guarantor, the guarantor will also be held legally responsible for paying it.

Partners with a history of debt often convince their new partner to enter into joint loans, joint credit cards or joint financial ventures with them, leaving the unsuspecting partner with the liability if the relationship breaks down.

How to safeguard your assets

If a cohabitee dies without leaving a will (that is, dies intestate), there are very strict rules governing who gets what and, once again, unmarried couples are not recognised under law. The only way for an unmarried partner to inherit is under a will and so, as the concept of common law husband or wife does not exist, this should not be left to chance.

If a cohabitee inherits money or property from an unmarried partner, they are not exempt from paying inheritance tax as married couples are, highlighting the advantages of tax planning when cohabitees are preparing a will.

Buying property together

Care should also be taken when unmarried couples buy a property together, either as a home or an investment property.

No one wants to experience the scenario where they meet a new partner who they decide not to marry but instead pool their money into a new property, only for the relationship to turn sour. In this circumstance, getting the money out of that property (either on a sale or one partner buying the other out) will be far easier if there is a document in place outlining the terms.

Often, a declaration of trust setting out who provided what towards the purchase price, and the proportions they each will get out upon sale, is highly advisable. A disagreement later about property ownership is best to be avoided.

Family lawyers are constantly asked to advise on the breakdown of a cohabiting relationship and so often the cost and heartache of sorting the mess out could have been avoided by basic relationship planning with a family lawyer when the relationship was healthy. Cohabitation agreements, wills, and declarations of trust may seem unnecessary when times are good but, like pre-nups, they can save acrimony and significant legal costs should the relationship fall apart.

If you have any questions on the legal protections available for cohabitees, please contact Claire O’Flinn.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.