`Why should you have half my stuff? I bought it.’ That’s a common phrase heard around wine o’clock, after a co-habiting couple fractiously split up, following a hoo-ha over text messages from a work colleague. And don’t get us started on who has custody of the dog. Here’s some news from Direct Line Life, who have a new survey.
More than three-quarters of family lawyers have seen an increase in couples seeking advice on setting up a cohabitation agreement in the last 12 months, reveals new research from Direct Line Life Insurance. In addition, almost one in ten (nine per cent) family lawyers say this has been a growing trend over the last three years. For unmarried couples a cohabitation agreement provides valuable legal protection, as it details each partner’s entitlements and how assets will be divided, such as; a share of a house or joint bank accounts, if they split.
Despite increased interest in these protections, there remains a huge ‘protection-gap’ as two million cohabiting couples in the UK do not have a cohabitation agreement in place. These people have very limited rights if they split with their partner and there is unlikely to be any legal obligation to pool or divide assets.
The majority of family lawyers (68 per cent) believe a cohabitation agreement should be taken out by a couple immediately upon moving in together. They believe it is imperative agreements are drawn up at this point to ensure parties know their liabilities if they split and to avoid contentious disputes over mortgage and rent payments or other financial commitments. However, other family legal experts argue the most important time to take out a cohabitation agreement is after having children (15 per cent), or after taking out joint financial products (14 per cent).
Just like pre-nuptial and post-nuptial agreements, there are legal challenges being mounted by people who having broken up with a partner that feel the terms of their cohabitation agreement are now not fair, or it doesn’t adequately provide for them financially. Legal experts report there has been a 19 per cent increase in legal challenges over the last 12 months, with people disputing a settlement they had previously signed up to.
A cohabitation agreement is vital if an unmarried person wishes to protect their investment in a property, where they committed a significantly larger sum than their partner, when purchasing a property as a couple. The agreement should clearly outline how the monies would be divided if the couple split.
Legal experts reveal the most popular clauses in cohabitation agreements currently include agreements on savings (89 per cent), bank accounts (83 per cent), mortgage or rental payments (72 per cent), investments (70 per cent) and custody/maintenance agreements for children (67 per cent).
The areas family lawyers crucially believe couples often fail to include in a cohabitation agreement are next of kin rights (36 per cent), current or potential for family inheritance (29 per cent), maintenance agreements for children (28 per cent) and household bills (24 per cent). Highlighting the increasingly contentious issue of ownership and access to pets following a breakup, over a quarter (28 per cent) of lawyers believe this is an area too often excluded from a cohabitation agreement.
Chloe Couper, Business Manager at Direct Line Life Insurance, commented: “It is important unmarried couples realise they have very little legal protection if they move in together and take on joint financial responsibilities, without a cohabitation agreement in place detailing how assets and liabilities like bills are to be dealt with if they split. A cohabitation agreement can prevent lengthy and expensive court proceedings and additional emotional stress after a break-up.
“When considering financial protection people should also consider life insurance as a valuable safety net that can provide for their family in event of tragedy striking. Policies that enable couples to split the cover if they break-up can be extremely beneficial as they could offer no loss in protection for either partner should a relationship sadly come to an end.”
The importance of cohabitation agreements is underlined by additional research, which reveals 1.7 million (26 per cent) people in an unmarried cohabiting couple have no idea how assets would be divided if they split.
In the case of a house purchase people’s lack of the knowledge of the law is worrying, a quarter (25 per cent) of unmarried Brits have no idea how a property would be divided if an unmarried couple split having contributed different amounts to a deposit or mortgage. Almost a third (30 per cent) of people think the assets would be divided on the basis of the financial contribution of both parties if the relationship broke down, while five per cent believe it would be split on a ratio of the couple’s income. Legal experts state in event of an unmarried couple breaking up, a house with one partner’s sole name on the deed would belong to them alone unless it could be proven otherwise, with any joint assets usually split 50/50.
If someone owns a property in their name only they can evict their partner from the home without getting a court order, they don’t need permission to take a loan out against the property or sell it without the other person’s agreement An ex-partner may be able to continue living in a property, or secure a share of its value when sold, if they can prove to a court they have paid towards home improvements or the mortgage.
In England and Wales even contributing to a mortgage does not automatically guarantee a share of an ex-partner’s property. In Scotland to continue living in a family home they can apply to the court for ‘occupancy rights’ but there is no guarantee it will be granted.