Co-habitation

Background

It is a fact that more couples nowadays are living together than in previous years. Co-habiting couples now account for over 14% of all relationships.

However, most couples starting a relationship tend not discuss issues regarding property, children, or finances as they do not wish to confront the fact that the relationship may go wrong. Many people also believe that dealing with the financial implications of relationship breakdown is only for the rich and famous. However, if any relationship breaks down, the unmarried couple, who have been living together and have bought property together, are, for instance, not automatically entitled to a 50/50 division of the proceeds of sale of the property. In addition the father may not have legal rights in relation to the children. Issues in relation to maintenance may arise. Who will be responsible for the bills and outgoings in the property? Furthermore, in unfortunate cases where one of the partners dies, concerns will arise as to the division of joint assets and the welfare of any minor children.

What can be done

It is strongly advisable for a co-habiting couple to draw up an agreement which can cover many or all aspects of their shared lives. Our Family and Relationships team can help and advise on the drawing up of such an agreement which can save a great deal of unhappiness, confusion and expense if the relationship breaks down. We can advise you on the nature of the agreement and its scope. We understand that it can be unpleasant to contemplate the end of a relationship, but we aim to be focused, sympathetic and
constructive.

Potential Issues for Co-habitees

Finance and Property

It can be complicated and expensive to calculate percentage shares in a property.

The usual 50/50 split may not apply for co-habitees. Shares may depend on the financial contributions of the parties and which party is registered as the house owner. It is advisable to come to some sort of agreement about this before any separation occurs, and thus avoid expensive litigation.

For example, in a case recently decided in the House of Lords, a couple, Mr S and Ms D had lived together for almost 30 years. They had four children and purchased a property jointly during the course of the relationship. Unfortunately the relationship broke down and Mr S made a claim to the court for a 50/50 split on the property, which was upheld. There is a presumption in law that when property is purchased equally then it will be owned in equal shares. The burden lay on Ms D to show to the court that a move from the usual 50/50 division was appropriate in this particular case due to the increased contributions she had made over the course of the relationship. Ms D successfully proved that she had made far greater contributions than Mr S and therefore her percentage share of the property value should be increased. Having appealed the decision of the original Judge that the property should be held on an equal basis, the House of Lords upheld Ms D’s claim that concluded that her share of the assets should be 65% with Mr S receiving 35%.

Maintenance

As a co-habitee you cannot claim maintenance, spouses can do so, but co-habitees cannot - but this may not prevent you claiming against your partner’s estate upon death. If there are children of the relationship, the parent no longer living with the children still has an obligation to maintain them.

Children

When a child is born to an unmarried couple, only the mother automatically has parental responsibility. However if the father’s name appears on the birth certificate after 1st December 2003 the father automatically has parental responsibility too. In the event of a dispute, a parent with parental responsibility has a right to decide whether the child receives medical treatment, what religion the child follows or what school he or she attends. The father can also obtain parental responsibility in several other ways. He might sign an agreement with the child’s mother (which must be registered at court), or the court might order that he has parental responsibility, or he might marry the mother.

Child Maintenance

The court can only make an order for child maintenance if you and your partner reach agreement, or if extra maintenance is needed in special circumstances, for example for education fees or to fund a disability the child may have. If you cannot agree, your former partner can ask the Child Support Agency to assess how much you should pay. Under this system, the parent no longer living with the child will pay a fixed percentage of income as maintenance. For one child the parent will pay 15% of their net income, 20% for two, and 25% for three children or more. Parents must maintain their children until the age of 17 or the end of full-time education (not including university or college), whichever is later.

Death

When one member of a co-habiting couple dies, it can come as an unpleasant surprise to the bereaved partner to discover that not all of their late partner’s estate will pass to them in the absence of a will. It is only when this happens that many people become aware that there is no such thing in law as a ‘common law’ spouse, so it is important that people living together give thought to protecting their position by the means currently available to them.

Where there are assets which are jointly held (as ‘joint tenants’ in legal terminology), these will pass by survivorship to the other partner. Property held jointly and joint bank accounts are normally held in this way. Also, if there is a life assurance policy or there are pension benefits payable to a nominated person, then the surviving partner will receive these if they are the named beneficiary.
Once such assets have been dealt with, however, the rules of intestacy apply if there is no will. An intestate estate passes (with a rather complex formula regarding its division depending on the size of the estate) to the relatives of the deceased. This will normally leave the deceased’s partner with nothing.

However, the law does allow a claim for provision to be made from the estate of the deceased by dependents if they are persons for whom the intestate person might reasonably have been expected to make provision.

A surviving co-habitee can make a claim if the deceased died intestate or failed to provide for them in the will if:

• they were maintained by the deceased in whole or in part immediately before the death of the deceased; or
• for two years prior to the death of the deceased they lived in the same household as the deceased as if they were the husband, wife or civil partner of the deceased

In such cases the court may be requested to make ‘reasonable provision’ for the applicant. There are a series of guidelines which have been set to ensure that the provision made is fair, bearing in mind the size of the estate and the circumstances of those with an interest in it.

The court’s powers to divide the estate are considerable and can include making orders for periodical payments or lump sums or the transfer of specific property to the claimant. However, it should be remembered that transfers on death to a co-habitee do not qualify for the ‘spouse’ exemption from Inheritance Tax which applies to transfers to a spouse or civil partner.

As we have said, many of these cohabitation issues can be addressed more easily by prior agreement and we would suggest that you consider taking such a course.

Please contact us at familyandrelationships@glazerdelmar.com if you would like more information about co-habitation.