Why do unmarried cohabiting couples still believe they have the same rights on separation as a married couple?
Marriage has been on the decline over the last few years. The fall is generally attributed to the high costs of getting married. Additionally, young people are prioritising house-buying and having a family before marriage. For many couples, they simply don’t feel the need to have a “piece of paper” to validate their relationship. But what if they decide to separate, or even if one of them should sadly pass away? Will not having that ‘piece of paper’ prove to be costly?
Rights on separation
Unmarried cohabiting couples are often shocked to discover that they have fewer rights than they anticipated on separation.
For married couples, the law aims to ensure that there is a fair financial outcome at the point of separation. Due consideration is given to all the circumstances. This is not the case for unmarried cohabiting couples. Couples often believe, incorrectly, that they have rights as a ‘common law spouse’, or, they believe they will have acquired rights if they have lived together for many years. These are also not the case.
So, what happens as an unmarried cohabiting couple with respect to your home when you separate?
Your property is held as joint tenants
A joint tenancy agreement means that the co-owners are each entitled to the whole of the equity in the property. There is a presumption that you hold the property in 50/50 shares, irrespective of what was put in at the start. If you separate, you each take that 50% share. If one of you dies, your share of the property automatically passes to your partner.
As equal owners, if you separate you must both agree what to do with the property; the property cannot be sold from under you.
Your property is held as tenants in common
Being tenants in common means you both have a share of the property, which will have been determined at the outset. It is often a 50:50 split but it does not have to be and is simply a defined percentage.
Many parents are now helping their offspring in purchasing property by providing deposit funds. This can also be recognised in the joint tenancy agreement. For example, 70% of the deposit is provided by one owner and 30% by the other, in the event of separation and sale of the property, the initial deposits are returned in that proportion.
What if you moved into your partner’s home?
What happens if your partner owns a property that you moved into? Supposing you have contributed to the mortgage and running costs for many years; do you have any rights if you separate?
If you pay the mortgage, you are likely to acquire a share of the property. If you have paid running costs and other expenses you may still not be eligible to acquire a share of the property.
Unfortunately, cases involving unmarried cohabiting couples that have separated are extremely difficult to resolve without litigation. As the non-owning party, you have to prove that you have a financial stake in the property.
Inheritance rights for unmarried cohabiting couples
There’s a common misconception that if you die your partner will inherit your estate whether or not you are married. Unfortunately, this is not the case.
If an cohabiting partner should die, the starting point is that, if you are not married and you haven’t made a Will, the other partner stands to inherit nothing. Under the Intestacy Rules, if your partner has children, all assets that are in your partner’s sole name will pass to those children. If there are no children, then everything passes to your partner’s parents, siblings or broader family. This could of course mean you are left in in considerable financial difficulty.
Whilst the end of a relationship is never a happy time, there are ways to avoid adding financial uncertainty into the mix.
- Get a cohabitation agreement when moving in together
- Make a will
- Consider buying property in proportion to your financial contribution (a tenancy in common)
- Get a Declaration of Trust drawn up
- If you are lending a deposit to a cohabiting couple as ‘Bank of Mum and Dad’, seek legal advice before you commit
For advice on drawing up a Cohabitation Agreement, or for any advice on separation, please contact us in London (West Drayton) on 01895 449288 or in Hertfordshire (St Albans) on 01727 840900 or by email via our contact page.