Cohabitating Couples
In today's society more and more couples are choosing to live together as cohabitees rather than as a married couple. It is a myth which we as solicitors have heard on numerous occasions, that a person who has been in a relationship for 6 months, two years or whatever period acquires the position of common law wife/husband and as such obtains similar rights to those of married woman/men. Myth. Not true. As a cohabitee, however long you have been in your relationship and regardless as to whether you have spent years raising children, you do not acquire any rights over your partner's income or assets. The ownership of your property will depend upon the name in which the property is registered and any agreement, whether oral or in writing, that varies the ownership of that property.
Cohabiting couples are treated as separate, unrelated individuals for tax purposes.
Cohabiting couples are not entitled to survivors benefit under the State Pension Scheme. In any assessment of entitlement to means test the state benefits, the fact that two people are living together as husband and wife can be taken into account.
Cohabiting couples may be able to obtain death in service benefits as a nominated beneficiary but this depends upon the pension scheme notably many public service schemes (e.g. the Police) do not offer this option leaving cohabitants ill provided for.
The position of a cohabitee contrasts with the position of a married person who has the protection of such Acts such as the Matrimonial Causes Act and the Matrimonial Homes Act. The Court has wide discretionary powers to distribute property fairly following the break down of a marriage. There are Capital Gains Tax and Inheritance Tax benefits for married couples which can be utilised to assist in tax planning, that do not apply to cohabitating couples. On the death of a husband or wife the widow or widower is entitled to receive a modest State Pension from what their spouse would have received if they had lived into retirement. Spouses are also entitled to a share of pensions upon divorce and most pension schemes contain provisions allowing for the spouse to benefit from a pension on the death of the other pension holder. Same sex couple who have chosen to register their partnership under the Civil Partnership Act 2004 also receive protection as do married couples.
Cohabiting couples are strongly recommended to consider their relationship, ownership of property etc at the time they choose to cohabit and enter into a cohabitation agreement. This is a contract drawn up between the cohabitee and the contract can deal with the ownership of property; the effect of later contributions i.e. paying for major repairs, reducing the capital outstanding on the mortgage, paying for improvements, making non monetary contributions; the effect of the liability of one party to pay the mortgage; negative equity. The agreement can also deal with any arrangements for the payment of outgoings and utilities; maintenance; the contents of the property i.e. items brought into the relationship, items purchased during the relationship; hobbies and insurance; items brought on credit; credit cards, joint loans and other assets.
The agreement can also deal with the issue of children i.e. parental rights and duties, the effect of pregnancy and liability for maintenance.
The contract should also deal with the events given rise to termination of the contact e.g. death, marriage and mutual agreement to end the relationship. The agreement will then go on to make a provisions for the end of the relationship i.e. what is to happen.
Separation Agreements - Legal Separation
Whilst parties are in a good relationship the terms of the contract can usually be easily agreed and this can assist the parties with the difficulties and emotional turmoil of separation. Relationship breakdown is a very traumatic time for both parties and disputes often arise. A cohabitation agreement, clearly drafted providing for a break down of the relationship can avoid disputes, problems and bad feeling at the end of a relationship. If you require any further advice with regard to a cohabitation contract please do not hesitate to contact us.
Legal Separation may be appropriate for married couples who do not wish to consider divorce but do wish to legally separate. You can legally separate by entering into a Separation Agreement which is a contract between you and your spouse which can include provisions upon which you agree. The agreement can deal with financial matters and matters in relation to children. It can also provide for divorce at some time in the future. The agreement does rely on both parties agreeing the terms. If it is not possible to agree the terms of the contract then an application to the Court will be needed in either divorce proceedings or proceedings for judicial separation. Judicial separation is rarely used but maybe appropriate where there are specific reasons why the parties do not wish to divorce and require a legal separation but cannot be agreed. A Separation agreement is a contract enforceable in Contract law and although the Matrimonial Courts retain overall jurisdiction, case law has shown that the Matrimonial Courts will uphold a separation agreement that has been properly drafted, full disclosure of the assets has been given to both parties and both parties have received independent legal advice. If you require further advice with regard to legal separation please contact us and we will be happy to advise you.
Cohabitation / Civil Partnership Act 2004
On the 18th November 2004 the Civil Partnership Act received royal assent and it will come into force on the 5th December 2005. The Act provides for the registration of same sex partnerships on 15 days notice. A Civil Partnership document must be signed by both parties in the presence of each other and in the presence of a Civil Partnership registrar and two witnesses. The ceremony cannot be a religious ceremony. As for marriage there are prohibited degrees of relationship and parties who are already married or in a Civil Partnership or where one is under 16 cannot register.
Such partnerships can only be dissolved by the Court process on the ground of irretrievable breakdown. The facts are similar in respect of married couples divorcing. There are rights to claim financial provision, property adjustment, sale of property, pension sharing and pension attachment on dissolution as with married couples.
A civil partner will be able to acquire parental responsibility of their civil partners child by agreement or Court order and they can apply for residence, contact or financial provision under Schedule 1 of the Children Act 1989.
Civil partners will have unlimited insurable interest in each other. In general, civil partners will be treated as married people for benefit proposes. A Will is revoked on registration as upon marriage. Civil partners will be able to inherit under the Intestacy rules and can claim under the Inheritance Provision for Family and Dependants Act and succeed to tenancies as married partners.
This is exciting new area of law and we look forward to its introduction. If you require advice with regard to the Civil Partnership Act please do not hesitate to contact us.
Please note that registered partnerships will not offer any protection for heterosexual unmarried couples or for same sex couples who do not register. Such couples should follow the advice of the Law Commission and set out for themselves what they want their rights to be in a cohabitation agreement. Please see the advice for Cohabitating Couples above.