February 15, 2021

Who gets the dog? The value of ‘no-nup’ agreements for unmarried couples

Valentines is over, lets get real..

When things get serious with a partner, the last thing on your mind may be a break up. But with an increasing number of couples deciding not to marry, it can be important to consider your legal position if things do go wrong.
For instance, what would happen to the house you live in together? The money in joint bank accounts that you share? What about children you have together? What about pets?  
These questions generate a lot of uncertainty, but this is precisely why you may want to think about a ‘no-nup’ - which can also be known as a ‘cohabitation agreement’.

What exactly is a cohabitation agreement’? 

It’s a formal contract between two people who live together who want to ensure clarity about their rights in relation to finances, property, children and even pets, both during their relationship and if it ends. 

The agreement can confirm things like:

  • Ownership of your existing assets;
  • Financial responsibilities towards each other;
  • Responsibilities for bills and other outgoings;
  • How savings and assets you buy together will be split if you break up; and 
  • How you may look after your children if you split.

That doesn’t seem very romantic… 💔

What’s more romantic than being prepared?! A cohabitation agreement may allow you to be realistic about your relationship and can save you emotional and financial distress in the future should it not work out. 

It’s also an opportunity to have honest discussions and come to an agreement about important issues in your relationship - both now and in the future.

Don’t I already have protection under ‘common law marriage’? ⚖️

There is no such thing as a ‘common law marriage’. This is true no matter how long you’ve lived together, whether you own property together, and even if you have children together.

Despite the fact that common law marriage has not existed in Britain since 1753, 46% of people in England and Wales still believe that unmarried couples living together are afforded similar legal rights to married couples upon separation. This is not true – let's have a look at the differences. 

Legal position of married/civil partners vs. unmarried couples 

Married/Civil Partners Unmarried Couples
Property Rights If a married couple divorces or civil partnership dissolves, a court could impose a ‘fair and reasonable’ split of the value of the family home - regardless of who bought it or who holds the mortgage. Unless the home is in joint names, there are no guaranteed rights to ownership of each other’s property.
If one person owns the home in their sole name, the other may not be entitled to anything unless they can prove to a court that they contributed directly towards costs.
Financial support obligations Married couples/civil partners have a legal duty to support each other financially. A court can get involved if they do not.
Courts can impose a ‘fair and reasonable’ split of finances if the couple decide to divorce/dissolve partnership.
Neither partner in a cohabiting relationship has an automatic legal duty to support the other financially - especially after a split.
Children If the couple have children together, both are responsible for financially supporting children - even after divorce/dissolution. If the couple have children together, both are responsible for financially supporting children - even after a split.
Pension Rights In marriage/civil partnership, occupational pensions can offer equal benefits to husbands, wives, and civil partners. They also generally offer benefits for dependants such as children. Cohabiting couples may not benefit from each other's pensions.
Some schemes offer benefits to dependent children and some offer benefits to a dependent partner. It will depend on the rules of that specific pension scheme.
Inheritance Rights If a spouse or civil partner dies intestate (without a will) the remaining spouse will usually inherit all or part of their estate (e.g. property, bank accounts and assets).
Surviving partner will not pay inheritance tax on money or property left to them by their spouse/ civil partner.
If one cohabiting partner dies intestate (without a will), the other will not automatically inherit anything unless assets owned jointly (e.g. property, joint bank accounts).
If someone inherits money or property from their unmarried partner, they are not exempt from paying inheritance tax.

The Pros and Cons of a ‘Cohabitation Agreement’

If you’re unmarried and live with your partner, a Cohabitation agreement may address the legal imbalance between married and unmarried couples. But are there any downsides? 

The Pros

✔️ Protection for both parties in the event of relationship breakdown

As we’ve seen above, cohabiting couples do not have the right to a ‘fair share’ of assets like their married counterparts. A cohabitation agreement provides clarity in the event of a break up - whilst also giving couples the freedom and autonomy to organise their financial affairs as they see fit.

✔️ Promotes a healthy relationship

Ironically, having a plan in place may improve relationships. Couples can spend money together in confidence, without worrying about their position if they break up. 

Importantly, an individual may be less likely to feel trapped in a relationship knowing their future finances are secured. 

✔️ Avoids the cost and uncertainty of litigation

Former cohabiting couples can spend huge sums of money on litigation to determine their respective shares in a property and how their assets should be divided. With a cohabitation agreement in place there is less scope to argue if your intentions are already documented.  

The Cons

❌ Concerns about legality

There is no legislation in England and Wales governing cohabitation agreements. Instead, it falls under the normal rules of contract law so it’s really important that the agreement is made properly - with both partners receiving independent expert advice. 

Whilst a Court is not legally bound to follow a cohabitation agreement in the event of a dispute, it will usually still do so if the contract was drawn up properly and entered into freely by both sides. 

❌ Discussing a split is uncomfortable!

Raising a cohabitation agreement with a partner might feel awkward and even suggest a lack of faith in the longevity of the relationship. But it’s best not to view it this way. 

Instead, the agreement can be a great chance to work through important issues in your lives together. When handled delicately, it provides clarity and can strengthen your relationship.

Is it worth it?

Cohabitation agreements can take time to put together and may be uncomfortable, but they are worth considering to give both partners peace of mind throughout a relationship and beyond. 

Whilst there are free templates online to draw up an agreement, it’s always wise to get in touch with a family law expert to ensure any agreement is legally binding on both you and your partner. While you’re at it - it’s also really sensible to put in place a Will to ensure your assets are divided as you wish should you die unexpectedly. 

Check out Lawya’s Family page for answers to more questions about your relationship and inheritance rights. 

With thanks to Sharon Gomez for writing up this blog. 

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