Unfortunately for cohabiting couples, the law isn’t entirely clear. There is no specific legislation in place to deal with cohabiting couples at the current time and this can cause a number of difficulties and make the relationship breakdown even more stressful.
Some may believe that they are protected by way of a common law marriage but in England and Wales, there is no such thing. Couples who cohabit together without marrying or entering into a civil partnership are at risk of losing out on financial provision under the current laws if they separate.
You could live with your partner for years, maybe even decades, and then on separation find out that you are not entitled to anything out of your partner’s house or any financial support by way of maintenance or pension provision. Even if you have children together, you may only be able to claim limited financial support for the benefit of your children and not for yourself.
If you are cohabiting and your relationship breaks down then your entitlement towards any assets (i.e. property, bank accounts, investments etc) is very much dependent on whether those assets are in joint names or owned by one person solely.
If a property is owned in your joint names then you will have an interest in that property. The exact amount of your interest is dependent on whether you hold the property as ‘Joint Tenants’ or ‘Joint Tenants in Common’. Whenever a property is purchased by 2 or more people then the conveyancing solicitors dealing with the purchase should have discussed with you how the property can be held and which option is more suited to your situation.
In essence, if the property is held as ‘Joint Tenants’ then you both own the property as a whole together and upon any separation, the basic position is that your entitlement will be 50% of any equity in the property.
“Bob and Bill have separated and their joint home is on the market for sale. Bob and Bill own the property as Joint Tenants and the sale proceeds of the property will be split equally between themselves.”
If you hold the property as ‘Joint Tenants in Common’ then you can specify the exact shares in which you hold the property. These could be equal shares or if one party has paid more of the deposit towards the property, the property may be held in unequal shares with one party due to receive more of the equity upon any separation or sale:
“John and Jill are purchasing a property together for £200,000. Jill is paying a deposit towards the property of £50,000 and the remainder is being funded by way of mortgage. John and Jill wish to hold the property as ‘Joint Tenants in Common’ in unequal shares and a Declaration of Trust will be set up protecting Jill’s deposit in the property and providing for her to receive the first £50,000 of the equity and any remaining balance to be split between John and Jill.”
A more tricky situation is if the property is only held in the sole name of one of the parties. Cohabitants do not have an automatic entitlement to a share of any assets owned in the sole name of the other and that includes the property that you may be living in. In many situations this leaves the financially weaker person without any financial support or a home to live. There are some exceptions and it is possible to acquire an interest in the property of the other party. It is therefore important to get legal advice on the breakdown of your relationship particularly if the property is in the sole name of one of the parties.
Bank accounts and debts
Any joint bank accounts are owned by you both jointly and any monies held in the account upon separation will belong to both of you. Equally, if the account is overdrawn at the time of separation then both of you will be equally responsible for the overdraft. It is therefore important for any joint accounts to be closed or transferred to one party upon separation to prevent the other party from incurring large debts or removing monies that you are both equally entitled to.
If you and your partner have separate bank accounts then the other party does not automatically have any entitlement to the same.
Debts work in a similar way and generally any debts in your sole name are your own responsibility whereas you and your partner would be equally responsible for repaying any joint debts.
Other financial Support
There is no legislation in place to provide you with ongoing financial support from your partner by way of maintenance or a share of their pension in the event of your separation.
Cohabitants also do not have an automatic right against their partner’s estate on death and if your partner dies without a Will or without leaving provision for you in a Will then it can be difficult to make a claim against their estate.
Where you have children, then you may be entitled to financial provision for the benefit of the children by way of child maintenance. If you and your partner can not agree the amount of maintenance to be paid then either of you can apply to the Child Maintenance Service for an assessment of the child maintenance. If your ex-partner earns more than £156,000 gross per annum then you may also be entitled to apply to the Court for a top up of Child Maintenance over and above the maximum maintenance calculation that can be assessed by the Child Maintenance Service. If you believe that this may affect you then we would recommend that you seek further specialist legal advice from one of our specialist Family Law Solicitors.
There is also legislation in place to protect your children’s interests and it may be possible for you to apply under Schedule 1 of the Children Act for a property to rehouse the children or a lump sum towards education expenses or other liabilities. If you believe that this may affect you then we would recommend that you seek further specialist legal advice from one of our specialist Family Law Solicitors.
What can you do to protect your interests?
- Ensure that any property or assets are purchased in joint names. If one of you is contributing more than the other then take legal advice on how to protect your interest and look at getting a Declaration of Trust in place to protect the same;
- Enter into a Cohabitation Agreement with your partner setting out exactly what contribution you will both be making to the property and any assets and how matters are to be dealt with upon any separation. A Cohabitation Agreement can be wide-ranging and cover a number of matters including what provision you each wish to make for each other on death and for the benefit of any children of the family.
- Have Wills prepared that make financial provision for the other in the event of death.
- Considering making each other beneficiaries under pensions or death in service benefits. Seek advice from IFAs or other wealth management professionals about the best way to provide for each other.