According to the Office for National Statistics, the number of cohabiting couples has grown by 25.8% over the last decade; one of the fastest-growing demographics in the UK. In 2020, there were around 3.5 million cohabiting couples, which at that time included PM Boris Jonson and his partner, Carrie Symonds (the first unmarried couple in No.10).
This raises an important issue as to how unmarried cohabiting couples can protect and manage their assets effectively (both those held in their joint names or respective sole names).
Although it will depend on the particular circumstances of each couple, two widely used options are Deeds of Waiver and Cohabitation Agreements.
Deeds of Trust
Also known as ‘Declarations of Trust’, these are legal documents that can protect an individual’s property rights and ownership in a ‘contract style' and can be adapted to suit the majority of circumstances.
They are most commonly seen where a couple (or any two unmarried adults) seek to purchase a house together and can be tailored to the needs of a specific situation, commonly some variation of the following:
- Each parties’ financial contributions towards the property purchase price (whether this is as a cash deposit or mortgage).
- Recording each party’s intended legal and/or beneficial ownership of the property.
- Each parties’ financial contribution towards the mortgage, outgoings, refurbishments, and/or maintenance of the property including both general and structural repairs (and whether or not this will affect a party’s beneficial interest in the property over time).
- If the property is sold, and/or if the parties separate, how will the parties realise their respective interest in the property i.e. how and/or when will each party receive their financial contribution.
- If the property is sold and the proceeds used to purchase another property for the couple, what will happen to each parties’ respective financial contributions.
- If the parties marry another person (i.e. not the other party to the deed) and/or have children what will happen to the parties’ respective financial contributions.
- If one party predeceases the other, or both parties pass away, how should their respective interest in the property be recognised by their estate and/or distributed.
If a couple enters into a declaration of trust regarding their home, and subsequently marry each other, the declaration of trust should be revised to reflect this change in circumstances in order to remain valid, and the couple should obtain legal advice from a specialist family lawyer.
Cohabitation agreements are another legal document that can record a couples’ interests in property as well as all other assets (including but not limited to investments, gifts, inheritance, mortgage repayments, insurance policies, and the ownership of vehicles) and personal belongings.
As with declarations of trust, cohabitation agreements can be tailored to suit individual circumstances, and can cover any/all of the points listed above, in addition to the following:
- The payment of maintenance from one party to the other.
- The division of child costs i.e. school extras, and extra-curricular activities.
- Which party has ownership of which assets and/or belongings (including the family pets!).
Since ‘common law marriage’ does not exist in England & Wales (simply a prevailing myth), cohabiting couples need to be aware of their limited (and in some cases non-existent) legal rights, compared to married couples. Therefore, a declaration of trust or a cohabitation agreement can provide some much needed legal protection.
In order to ensure a declaration of trust or a cohabitation agreement is given weight by the court (in the event that there is a dispute in the future) both parties should seek legal advice, and as noted above, should be reviewed regularly (particularly on marriage) to ensure they still reflect the parties’ intentions and can always be converted into a pre/post-nuptial agreement.