Daniel Williams, Partner in the Family team at QualitySolicitors Parkinson Wright, explains: “Unmarried couples have far fewer legal protections than married couples. It is sensible for anyone moving in with a partner to enter into a legal agreement that clearly sets out each person’s rights and responsibilities, especially when it comes to property, finances, and addressing potential disputes if things don’t work out.”
There are two main types of legal agreements that can help cohabitants clarify their intentions, protect their assets, and prevent costly disputes:
- A Declaration of Trust: This focuses specifically on property ownership and the division of proceeds of sale of any property owned by cohabitees.
- A Cohabitation Agreement: This covers broader financial and personal matters, including how bills will be paid, who is responsible for maintenance, and how contents of the family home will be divided.
Both agreements can work together, but it's essential to have them drawn up by a solicitor to ensure they are legally binding, accurate, and reflect the wishes of the parties. Without these agreements, disputes can become time-consuming, expensive, and emotionally draining.
Declaration of Trust: Protecting Your Property Interests
A declaration of trust is a legally binding document that clearly outlines how a property is owned and how the proceeds of sale will be divided. It defines each party’s share in the property, based on their contributions to the deposit, mortgage payments, and other relevant factors.
Key provisions typically covered include:
- Each party’s financial contribution to the deposit
- How mortgage payments and other expenses will be paid
- The procedure for selling the property and how the proceeds will be divided
- The process for one cohabitant to buy out the other’s share
- Occupancy rights, if applicable
For the declaration of trust to be valid, it must be in writing and signed by both parties. A solicitor should draft or review the document to ensure that it complies with formalities, includes all relevant property details, and is understood by both parties.
A declaration of trust is especially important in situations where one person contributes more financially than the other, or when the "bank of mum and dad" is involved and they want to ensure that the family finances are protected.
It can also be useful if one person buys a property alone but wants to give the partner an interest over time, even if their name isn’t on the title. In this case, the document would outline that, while you are the legal owner, you hold the property in trust for the benefit of your partner. This ensures they will receive their fair share when the property is sold or if the relationship ends.
Alternatively, if the property is solely in your name and you want to keep it that way, a declaration of trust can prevent your partner from claiming any ownership rights or entitlement to rental income or sale proceeds. If they argue that they contributed to the mortgage, the declaration of trust can provide clarity on the legal ownership.
Cohabitation Agreement: A Clear Framework for Your Relationship
A cohabitation agreement is a document that sets out the rights and obligations of each person in the relationship, helping to prevent disputes later on. While a declaration of trust typically focuses on property ownership, a cohabitation agreement covers broader issues, such as:
- Ownership of assets, savings, and shared belongings
- Management of finances, including bills, debts, and insurance
- Responsibility for repairs, maintenance, and other household duties
- Provisions for children, pets, and next-of-kin arrangements
- Plans in case of long-term illness or death
To ensure its legality in the UK, a cohabitation agreement must be drafted as a formal deed, signed by both parties, and entered into voluntarily. Both partners should seek independent legal advice and disclose their financial positions openly. It is essential to regularly review and update the agreement, particularly when significant life changes occur.
How We Can Help
Cohabitation agreements and declarations of trust are essential tools for cohabiting couples. It is crucial to consult a specialist solicitor to ensure these documents meet your specific needs.
Our expert family law team can guide you through the process, helping you create clear, legally binding agreements that reflect both partners' wishes and protect your financial interests.
For more information, please contact Daniel Williams or a member of the family law team on 01905 721600 or email worcester@parkinsonwright.co.uk .
Disclaimer: This article is for general information only and does not constitute legal advice. Please be aware that laws may have changed since publication.