We are entering the height of wedding season, with thousands of newlywed couples set to start their married lives under one roof. But for those couples already cohabiting, there are important things to know if you and your partner are to call the same place home.
Traps
No such thing as a common law marriage
The concept of a “common law marriage”, in which certain legal rights apply automatically to couples after they have lived together for a specified amount of time or have children together, is a misconception that many believe in and in fact does not exist.
It is important to understand that separating cohabitees do not have the same financial claims when their relationship breaks down as married couples.
‘Joint tenants’ vs ‘Tenants in common’
Legal problems can often arise through disputes between non-married cohabitees when the property they live in is either solely owned or owned as ‘joint tenants’ or ‘tenants in common’. When it comes to the latter two, know the difference.
If you hold the property as tenants in common, each party will own a specified share in the property. You will need to consider whether each person’s share will be fixed from the outset or whether the shares will vary according to the financial contributions made by each person during the ownership of the property.
Upon the death of a partner, their share of the property would be dealt with in accordance with their will. If they do not have a will, then the matter would be dealt with under the intestacy rule (i.e. next of kin) and if the parties are not married the surviving partner would not be the deceased’s next of kin.
By contrast, if the property is held by the parties as joint tenants, the shares in the property will not be defined and both parties will have an equal interest in the property. When one dies, the property will automatically pass in its entirety to the surviving partner i.e. not via a will or the intestacy rules.
Sole owners who are cohabiting
Being the sole owner of a home that you and your partner live in can create complications upon separation or death so be prepared for all eventualities.
If you are the sole owner of the property and your partner is moving in, you need to be aware of the potential consequence on separation. If you separate, your ex-partner may claim they have a beneficial interest in your property. Whilst this is not necessarily an easy claim to bring or prove, and can be costly, it is best to protect yourself before you cohabit to ensure your property interests are protected.
Intention to marry
If during your cohabitation, you decide to marry and continue living in the property, the property will be seen as the matrimonial home, which has implications if you subsequently divorce, as the matrimonial home will be considered in the division of assets on divorce. This can potentially be avoided by entering into a pre or post-nuptial agreement.
Renting a home together
If both names are on a tenancy agreement, you are equally responsible for the rent and other conditions of the tenancy. In the event you split up, you will need to discuss changes to the tenancy with the letting agent or landlord.
Tips
Consider a cohabitation agreement
In a similar fashion to a pre or post-nuptial agreement, couples can set out their intention as to how property should be managed throughout the relationship and how it should be dealt with on separation.
These agreements can outline such things as how the mortgage and other household expenses are to be paid during the course of the relationship and how the property is to be dealt with in the event of separation.
Declarations of trust
This is a legally binding document that records the legal and beneficial ownership of the property and is particularly relevant for those receiving gifts or loans from family members. It can record any agreement as to how the sale proceeds are to be divided if and when the property is sold.
Entering into such a Declaration can help to reduce reduce the risk of challenge to your Will by setting out respective shares in any property at this stage. We often advise clients to have both a declaration of trust and a cohabitation agreement in place to ensure they are fully protected.
Make a Will
This can help avoid any complications or disputes over who should inherit your interest in the home whilst leaving instructions for how you want your estate to be handled after you have died.
If you are the sole owner of a property when you die, and you have a will, the property will pass to your beneficiaries as per the instructions you have left, as opposed to it going to your next of kin.
Your estate could also be depleted if you die whilst someone is living with you and they are not provided for in the Will as they could contest your wishes, so ensure any potential for dispute is addressed.
Severing a joint tenancy
As a final thought, on separation a joint tenancy can be severed at any time by either party, after which the parties would own a property as tenants in common. It is suggested that, where possible, the relevant conversations are had beforehand to mitigate the potential for disputes.
The Thrings Family Team is experienced in all areas of the law that are close to home. Whether it is marriages and pre-nuptial agreements, or divorces and separations, they will put your best interests first, taking the time to get to know you so that you are supported with sound advice tailored to your needs. To find out more, get in contact.
