According to the National Statistics around 2.5 million unmarried couples in the UK are cohabiting. This is an increase of 67% from the last census and 24% of all men and women under 60 are living with a partner but are not married.
Many people believe that so long as you live together for a certain amount of time, 6 or 12 months are often referred to, then you become a "common law" husband or wife with all the rights a married couple would enjoy. On that basis people are often in long-standing relationships. They run their lives as married couples would do; purchase a home, have children, often one parent gives up work and makes economic sacrifices. Indeed to all intents and purposes to the outside world the couple are married.
However, when couples are married the law provides them with certain rights and protection for example when one of them dies or the relationship breaks down. In death married couples have rights even when no will is left. If their relationship breaks down then ultimately the court has the power to divide any property or other assets owned either individually or jointly including pensions and to make provision for the payment of maintenance to the partner who may have a restricted income. This is simply not the case where couples live together.
There is no such thing as a common-law husband or wife. Common-law marriages were ended by the passing of the Marriage Act 1753 which laid down strict formalities for a marriage ceremony.
So, if you live together and are not married then in the event of the breakdown of your relationship the Court does not have the power to alter your interest in any property, provide for maintenance (other than for children via the Child Support Agency) or the division of pensions. The division of any property will be dependent upon trust law which at the best of times can be complex and confusing and even more so in the family context. This can often mean that whatever the apparent "fairness" of the facts of a case property may be divided in a way that one or even both of the parties had never envisaged.
Imagine a couple who bought their first home in their early 20's. We shall call them Simon and Louise. They were young and not entirely sure it would work out, having never lived together before. The property was purchased in Simon's name alone. He put down a small deposit of £1000. The rest of the money was raised on a mortgage. The couple moved in together and both contributed to the mortgage and the outgoings. Three years later they had their first child and decided to move to a bigger property. Louise had for the time being given up work to look after their daughter. When the new house was purchased they were able to put a deposit down of £25,000 from the sale of the first house. The new house was also purchased in Simon's sole name. He never considered anything else as he thought of the money from the first house as "his". She never thought of anything else because she was not working and so believed her name could not go on the mortgage. She knew the house was "theirs".
The couple continued to live together and have two more children. Their relationship lasts for 20 years in total. Louise raises the children, runs the home and as the children get older takes on some part-time work. Simon works full-time and meets all the bills. Sadly their relationship then breaks down. Louise assumes they will divide the proceeds of the house between them. Imagine her horror when she discovers this is not Simon's intention and nor will it be what a Court will order. Unless Louise can establish that there was a common intention between them that the property was being held by Simon on behalf of both them (known as a trust), she will be entitled to nothing. Establishing such an intention where there is nothing in writing can be extremely difficult.
At the other extreme, a couple buy a property in their joint names. Michael and Ann are both working but have been unable to save any money. However, Michael's grandfather has recently died and left him £10,000. He decides to use this as the deposit on a property. The couple buy a house in their joint names. This is funded using the £10,000 inheritance and a mortgage in their joint names. After only 6 months the couple separate and agree to sell the property. After deducting the costs of sale and repaying the mortgage the net proceeds amount to the original £10,000 deposit. Michael assumes this will be his as this is the sum he invested only 6 months previously. In fact he is advised that Ann is entitled to half of the monies herself because of the manner in which their joint ownership works.
There are many more common circumstances where the law operates in these family situations in such a way that what most people would perceive as fairness is not achieved. For couples in long term relationships there had been the prospect, following the publishing of a Law Commission consultation paper in July 2007 that they would acquire some rights. However it now appears, following a statement by the Government last week that those proposals are to be shelved at least for the foreseeable future.
However with the appropriate legal advice at the outset many of these problems can be overcome. The making of appropriate wills in a cohabiting relationship is essential. As is a proper discussion as to what your intentions are regarding any property should you separate. However property is "owned" you can agree a division in the event of separation or death by executing a document known as a trust deed. If you wish to go further you can also execute what is known as a Living Together or Cohabitation Agreement.
This can go far beyond the simple division of property and can regulate quite detailed terms of your relationship so far as financial issues are concerned. It is perhaps not very romantic in the early days of your relationship to be discussing such matters but it can avoid a lot of distress and expense if your relationship does break down.
Such agreements are not a panacea for all ills and cannot give you rights to a partner's pension fund but they can help erode some of the disparities between married and unmarried couples in long term relationships and provide clarity and fairness in those that breakdown more quickly.
If you are currently co-habiting with your partner and want to find out more information about your rights and entitlements or want to protect your finances for the future, please contact Karen Moores at Sydney Mitchell on 08701 417 154 or email k.moores@sydneymitchell.co.uk.
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