Two recent cases underline the precariousness of cohabiting when it comes to fair division of property (and other assets) in the event of death or separation where there is no formal agreement governing such matters between the couple.
And this situation is only set to worsen as more and more couples either decide not to marry or to enter a civil partnership. According to the latest set of statistics from the Office for National Statistics, the number of couples cohabiting has increased from 6.8% in 2002 to 9.5% in 2015, which it attributes to an increase in cohabitation among younger people as an alternative to marriage, and among those who have been previously married or in a civil partnership.
Cohabitees are not next of kin
Married couples (and civil partners) have always had certainty in law in the event of divorce or death. In the former, the starting point for the division of property is the principle of equality, regardless of who owns what; and, in death (in the absence of a will) the deceased’s spouse is automatically first in line to inherit their assets. Cohabiting couples do not have any certainty without a will or a cohabitation agreement. Without a legally recognised document, if cohabiting couples split up, property is generally divided according to ownership (regardless of non-financial or financial contributions) or, in the event of death, goes to the next of kin (only married couples and civil partners are designated ‘next of kin’).
What rights do cohabitees have?
Not many, is the short answer, unless children are involved. If a cohabiting couple have children then only the mother automatically has parental responsibility. In order to assume parental responsibility, the father either has to be named on the birth certificate, enter into an agreement with the mother or obtain a parental responsibility, or child arrangement, order. If the couple separates, then the best interests of the children will take precedence which may well extend to what happens to the family home even if it is owned by one party rather than jointly.
Cohabitees rely on court ruling for fair settlement
In Martin v Williams, Joy Williams and Norman Martin bought a property together and owned it as tenants in common. They lived together for many years but never married as Mr Martin had not divorced his wife. So when Mr Martin died, his share of the property automatically went to his estranged wife as next of kin, rather than Ms Williams. Unable to buy out Mr Martin’s share of the property, Ms Williams faced losing her home and took her case to court. In court, the judge allowed her to ‘retain an absolute interest’ in the house for the remainder of her lifetime.
In another case, Southwell v Blackburn, Ms Southwell maintained that her former partner, Mr Blackburn, had promised to provide a secure home for her (bought by him) and, based on that promise, she had surrendered a secure tenancy in order to move in with him. When the relationship ended, Mr Blackburn changed the locks and Ms Southwell applied to the court for an equal share of the property. Although the judge did not find any evidence that there was a promise that she would become an equal owner, he did agree that she had given up her own home based on the promise of a secure home. The Court of Appeal rejected Mr Blackburn’s appeal against the ruling that he should pay £28,500 to Ms Southwell to compensate her for her financial loss in surrendering her tenancy.
Cohabitation Rights Bill
Both these instances underline the fact that cohabitees are treated as independent individuals under the law rather than as a couple. Going through Parliament at the moment is the Cohabitation Rights Bill which, although it had its first reading in the House of Commons last summer (2015), has progressed no further and, in the current political climate, is unlikely to be particularly high on Parliament’s priority list. Its intention is to confer some rights to those of the opposite sex who do not want to marry but who want to have some of the legal protection conferred on same-sex couples who can enter into a civil partnership. The Bill is designed to provide basic protection in the event that the couple split up or where one of them dies. It is also intended to allow each cohabitee to insure their life for the benefit of the other, or for any children.
Like pre-nuptial agreements, cohabitation agreements are becoming more commonplace and with good reason. Although they are not legally binding, providing they have been properly (and fairly) drafted and there is evidence that both parties have taken objective legal advice, most courts will take them into account, making potential disputes much easier (and cheaper) to resolve. Agreements can cover a range of things including who owns what (including the home); and who is responsible for the financial and non-financial contributions (such as DIY and childcare). Cohabitees should also make a will to ensure that each is provided for (although this needs to be updated if the couple separate) as well as ensuring that financial matters, such as pensions and insurance, are taken care of.
Until and unless the law changes, cohabiting couples must take direct responsibility for ensuring that each other is looked after and that– in the event of separation – both parties know exactly where they stand. A cohabitation agreement is, at present, the only option for cohabiting couples to ensure fair treatment before the law. Our family team regularly advises on, and drafts, cohabitation agreements and is very happy to discuss next steps if you are considering such an agreement.