Cohabitation, how can an agreement be reached on assets and money?

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Cohabitation is where two parties live together, usually in a subsisting relationship, but remain unmarried or outside of a formal partnership. The vast majority of couples in the UK are cohabiting couples living together but we also know that the relationship can be bias to one cohabitee when it comes to living arrangements or financial income. 

Whether cohabitees have children together or live together under one roof, there can be unease as to who is responsible to what and what obligations one has to the other if the relationship ends. This is where the creation of cohabitation agreements has developed to allow couples cohabiting to come to an agreement between themselves on what the rights and responsibilities are of each party in the relation when it comes to property and living arrangements, financial arrangements, and ensuring the children have what they need. 

The rise of cohabitation agreements has come from society moving away from formalising marriage or civil partnerships and, as such, with more people cohabiting there is more realisation that formalising these important aspects of our lives is something to get right and not put off. There is also the consideration that the awkward conversation about money and living arrangements will be worthwhile to avoid the costs of litigation and long-term ambiguity from getting into a dispute over beneficial interests in the home or maintenance for children. 

A cohabitation agreement has its pros and cons, these include: 

Pros

  1. Avoid costs and uncertainty of litigation
  2. Individual autonomy 
  3. Preservation of assets 

Cons 

  1. Uncertainty about enforceability 
  2. Cost
  3. Risk of relationship breakdown 

Taking these aspects of a cohabitation agreement into consideration, it is best to consider entering into an agreement prior to the purchase of property that both parties will occupy. This is because of the potential for a constructive trust and beneficial interest in the property arising in most cohabiting situations and this causes disputes over an entitlement to a proportion of the value of the property or the longer-term entitlement to remain in occupation beyond that which the other cohabitee would want once the relationship has ended. 

It may be something to consider if you are a cohabitee and speaking with your partner about formalising an agreement may be able to preserve the relationship into the future, go to our mobile application to view a draft of a cohabitation agreement and a questionnaire for the types of questions asked when setting one up. 

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