As yet, there is no such thing as common-law marriage and, realistically, it’s hard to see how one could be established.
This means that the onus is on couples in a cohabiting relationship to take all necessary steps to put their relationship on a legally-solid footing.
The Legalities of Cohabitation Agreements
From a legal perspective, a cohabiting couple is treated as being two individuals unless they explicitly specify they wish to be treated as a couple. There are two key points to take away from this:
In a cohabiting relationship, the death of one partner will not automatically result in their assets being transferred to their partner. They will need to make a will and they will also need to make arrangements to cover the inheritance tax which will be charged on the transfer. Transfers of assets between spouses and civil partners are tax-free.
Similarly, there are no “marital assets” to be divided in the event of a divorce, nor can one party expect to receive “spousal maintenance” from the other. Children do have a claim on the income of both their parents; however, in practice this will only apply by default if the father is named on the birth certificate. If he is not, then the mother (or child) can try to prove paternity by a DNA test but in practice, this can be more complicated than it sounds.
In principle, none of this matters (or should matter) if a break-up is amicable, but if it is not, then there is, frankly, scope for all kinds of frustration and possibly heartache if precious items are simply grabbed by a departing partner and the circumstances of the removal mean you do not have a claim for theft. Cohabitation agreements, however, can provide clarity and hence peace-of-mind for both parties, both in good times and in bad.
What Cohabitation Agreements Should (Usually) Cover
While acknowledging that a cohabiting couple will not necessarily have children, when there are children they should always be top priority. The will, can, and should specify what arrangements are to be made for the guardianship of children in the event of a couple’s death. Cohabitation agreements can outline plans for custody and financial support in the event of a break-up.
The definition of property extends beyond the family home, although if a couple is home-owners this is a good place to start. It can set out what property can be sold (e.g. large, non-sentimental items such as cars) and the proceeds divided between the two parties, versus what needs to be given to one person or another and if so to whom. Couples can also detail sentimental items, perhaps ones they had before the relationship, to make sure that it is clear that they will retain these if the relationship ends.
Anything which is held jointly, be it a positive asset (like shares) or a liability (such as a loan) needs to be covered in a cohabitation agreement. As a side note, couples may like to note that banks may restrict access to a joint bank account upon the death of one of the holders and so it can be a good idea for each half of the couple to hold their own separate bank account to be on the safe side.
Kerry Smith is the Head of Family Law at K J Smith Solicitors, a specialist family law firm that deals with a wide range of issues, including divorce, domestic violence, civil partnerships, and prenuptial agreements. Kerry has over 15 years of experience in family law and is recommended by the Legal 500 guide to law firms in the UK. www.kjsmith.co.uk