Living with your partner can be an exciting time; from weekly shops and sharing the car to planning a future family or pets, there’s so much to enjoy. However, if you don’t plan on getting married, or it’s something that isn’t going to happen for a while, you need some form of security to ensure your rights are protected if your relationship breaks down in the future.

A cohabitation agreement can be the answer you’re searching for. This document is executed by you and your partner if you’re not married or in a civil partnership, and it includes terms regarding how your shared assets would be divided, in the event of a separation.

Let’s look into what makes a cohabitation agreement, whether they’re legally binding or not and how to make one valid.

What is a Cohabitation Agreement and What Does it Cover?

Firstly, you may be wondering why a cohabitation agreement is important. A cohabiting couple don’t have the same rights as a married couple, or those in a civil partnership. So, if your relationship were to break down, a cohabitation agreement will outline how your shared assets will be split between you and your partner.

When drafting your agreement, you and your partner should be as specific as possible, anything you share and what happens to it can be put into this agreement, so it’s important to be thorough and for you each to comprehensively disclose all your assets to each other.

Issues that can be dealt with include:-

Houses

The agreement can state what will happen to your shared home, whether you both own it jointly or just one of you is the sole owner. You may decide to sell, or just transfer ownership to one person, but whatever you decide, you can record it in your agreement.  You may quantify and formalise your respective financial shares in a separate document called a Deed of Trust.

Finances and other daily bills

Mortgage payments or rent, household bills, even joint bank accounts and savings accounts, a cohabitation agreement can detail how these will be split following a relationship breakdown.

Children

While a separate Child Arrangement Order will need to be set up to decide where any children live or spend their time, you can include details of any financial arrangements to do with the children within a cohabitation agreement. For example, any money that’ll go towards their upbringing or any savings for their future.

Pets

This can be a sensitive subject in the event of a relationship breakdown, which is why it’s a good idea to include in your cohabitation agreement who the pet lives with and who is responsible for looking after the pet physically and financially.  Without an express agreement the law is very backward looking and simply treats pets as possessions or using an old word from the Administration of Estates Act 1995 “chattels” as if they are inanimate objects.

Personal assets and contents

Vehicles, furniture, jewellery, any valuable items that were brought into the relationship by you or your partner can be added to the agreement, including details of who will take ownership of them.

Debts and other liabilities

If one of you has debts, adding them into the agreement can clarify who they belong to, confirming the other party won’t be responsible for them and can’t be approached for any payments towards them.

Businesses

Any business interests can be detailed in a cohabitation agreement. If you or your partner owns a business, or you own one together, you can clarify what will happen to it.

Any digital assets

This includes things like cryptocurrency and investments. If you have these in your relationship, shared or otherwise, adding them into your agreement will ensure they’re accounted for.

A cohabitation agreement should be well-drafted and tailored to suit you and your partner; that’s why it’s ideal that you can include as much or as little detail as needed to deal with financial arrangements during the time you live together and in the unlikely event of you splitting up.  It’s important to note that while a cohabitation agreement is efficient for sharing assets in the event of separation, they can also simply be used to divide finances while you’re in a relationship, providing clarity and security for you and your partner.

What Makes a Cohabitation Agreement Valid and Legal?

When you’re cohabiting with your partner, you won’t have the same rights as those in civil partnerships or married couples. While a cohabitation agreement isn’t a legal requirement, it’ll be beneficial for security and potentially your future.

A Court is likely to recognise a cohabitation agreement now, especially those that are well-written, if you ever needed to go to Court for a related issue.

It’s important to understand the legal implications of a cohabitation agreement to avoid future frustrations. In a cohabiting partnership, you are not legally entitled to your partner’s assets, inheritance (if there is no will present) or maintenance payments. Many people believe that if you live with your partner for many years, ‘common law marriage’ becomes viable, but this isn’t the case, this is why a cohabitation agreement is a practical next step for you and your partner. But how do you make a cohabitation agreement valid?

  • Both parties must receive independent legal advice before signing the agreement. This is crucial because it means you’ll both understand every detail in the agreement. It prevents one party from saying they didn’t understand later, which can result in the agreement being challenged.

  • Your cohabitation agreement must be written down. Furthermore, it’s beneficial to execute your agreement as a deed. A deed holds a lot of legal weight and ensures the whole thing is accurate. A deed must be signed in front of an independent witness in order to be valid.

  • Both you and your partner should disclose complete financial positions, so any assets, income, debts and more, before the cohabitation agreement has been written up. Leaving things out or misrepresenting information can lead to an unenforceable agreement.

  • Each party should receive separate independent legal advice on the terms of the draft agreement.

  • Each party must enter the agreement of their own free will.

Do I Need to Add a Variation Clause to My Agreement?

Life isn’t always easy, things change often and you ideally want to be as prepared as possible. But how can you do that with a cohabitation agreement?  You can add a variation clause into your cohabitation agreement to set out the process of how to deal with any changes that may occur in the future.

It’s always a good idea to add this type of clause into your agreement as it’s a safeguarding measure. If one party later argues that your agreement was changed through a simple conversation or promise, a variation clause can help to combat this kind of risk.

If you choose to include one, as they are not a legal requirement, it means that if any changes are to occur in the future, they must be made formally and in writing, executed as a deed (signed in front of an independent witness).

Even if you have a sincere conversation about any potential changes, they will not count.

Cohabitation Agreements: to Sign or Not to Sign

With an ever-changing landscape that is seeing more people cohabit without feeling the need to get married or enter a civil partnership, a cohabitation agreement deed is an important document that you and your partner can benefit from. Whether your aim is to prepare for whatever the future may hold, or you both simply want to outline the clear division of assets, it’s a handy document to have that you can update whenever you need to. Protect your property, finances, businesses, beloved pets and more with an agreement today.

At Farleys, our family law solicitors can help you with your cohabitation agreement, from drafting up a clear and concise document to offering sound legal advice if you need to make any changes. If you would like to speak to our team, contact us today on 01254 606 008, or use our online enquiry form.