Why a living together agreement is essential to secure your financial future

A sharp increase in the number of cohabiting couples over the past 15 years or so has led to a rise in complex and often costly legal disputes when they split up.

Many people believe that they have the same legal protection as married couples, however, there is no status in English law as a common-law spouse or partner and no such thing as a “common law marriage”.

If a cohabiting relationship breaks down there is very little protection for the financially weaker partner, typically the woman, who often has children. As a result, some cohabiting families can find themselves facing real difficulties should they separate.

In England and Wales, when married couples divorce or civil partners break up, both parties have a legal right to maintenance and their share of assets, including property. The Court has a wide discretion under marital law to take all the circumstances and history of the relationship into account and decide on a fair division. Cohabiting couples have no such rights to any financial support if the relationship breaks down, regardless of the number of years they have been together and whether they have children. One parent may be entitled to Child Maintenance, however, the amount due is calculated by the Child Maintenance Service using a standard formula based on the ex-partner’s income.

If the couple do not have a Declaration of trust for any property they might co -own, should a dispute arise they may find themselves having to navigate their way through complex laws of trusts to work out how much of a share in the property they might be entitled to. Not only is this problematic, it does require expert, legal advice to resolve. The interpretation of the law on trusts is frequently changing on a case by case basis.

To avoid such issues it is a good idea for any couple who are thinking of moving in together to enter into a “Living Together” Agreement. This can set down at the outset what might happen in the unfortunate event their relationship breakdown and prevent any problems arising. It can cover how you will support your children, over and above any legal requirements to maintain them, as well as how you would deal with bank accounts, debts and joint purchases such as a car. Whilst it is not the most romantic way to take the next step in your relationship, knowing all the practicalities have been addressed gives peace of mind and ensures future finances.