Cohabitation and declarations of trust

Couples who live together in a relationship, but do not marry or form a registered civil partnership, have no special rights if the relationship breaks down and they separate. Despite the media referencing “common law” marriages, no such law exists in England. This can result in one party being left with nothing.

what is a cohabitation agreement?

If you live with your partner or are planning to do so, you can help protect your interests by entering into a cohabitation agreement, also known as a living together agreement.

A cohabitation agreement is a document that you and your partner agree to before or while you are living together. It is a contract that details how you and your partner will deal with matters that could result in a dispute if the relationship comes to an end. It’s not a romantic gesture but a sensible step to take. Legal action in the case of a relationship breakdown is more stressful and more costly without a cohabitation agreement in place.

what does a cohabitation agreement cover?

Financial assets

Partners living together have no legal right to financial support from the other partner and do not acquire an interest in any property simply by living there.

Property may be held in one party’s sole name, but you might make contributions that give you an interest in the property. It can be complex and costly to establish this in the event of a relationship breakdown. This means it’s better to have a clear understanding from the outset of the relationship.

Property that you own together may need to reflect different contributions made by each party. A separate declaration of trust can be helpful in this situation.

Financial provisions for children can be agreed upon in addition to anything that might be legally required through the child maintenance service. Such claims, particularly for money, can be difficult and lengthy. For this reason, it is better to agree on these details upfront.

Children

Historically, fathers did not automatically acquire parental responsibility for a child if they were not married to the mother.

Parental responsibility is defined as “all the rights, duties, powers, responsibilities and authority that a parent of a child has in relation to the child and their property by law”.

Parental responsibility does not determine whether a person has an obligation to provide for a child financially.

The intention that both parents should have full involvement and be consulted in all aspects of a child’s life can be written into a cohabitation/living together agreement. This sets a basis for cooperative and amicable co-parenting in the future, even if the relationship fails.

Wills

Unless specifically stated in your will, your cohabiting partner will not be your next of kin and will not benefit from your estate. We can put you in touch with a solicitor from our wills and probate team to help you make the most appropriate arrangements for your situation.

living together relationship breakdown.

If your relationship breaks down and you do not have agreements in place for financial arrangements or any children, you may need help and guidance from our trained lawyers to reach an agreement. This can then be confirmed in a separation agreement if necessary. A separation agreement would include details such as how to deal with contributions you have made to properties you each own, agreements regarding businesses you might run together as well as liabilities, bank accounts and arrangements for children.

If you cannot negotiate an agreement, our team of family lawyers can help. They will offer clear and pragmatic advice about your rights in the property in which you live and whether you could consider an application to the court to confirm or establish your interest in the property. It’s important to know that these are civil law proceedings and can be very costly. Your claim would be dealt with under The Trusts of Land and Appointment of Trustees Act 1996, which will not treat your circumstances with the same discretion towards “fairness” as would be the case with a marriage breakdown. In some circumstances, you can make applications on behalf of children from your relationship under Schedule 1 of the Children Act 1989, but again this is complex and costly.

A declaration of trust – also known as a deed of trust – is a legal document that records the financial arrangements between everyone who has a financial interest in a particular asset. It is most commonly used for property.

why is a declaration of trust/deed of trust important?

A declaration of trust protects and records the investments that each party puts into the purchase of an asset. For example, if you buy a house with your partner, or you give your children money towards a flat, it records the money that you invested into that asset. This means that when the property is sold, the funds can be returned as agreed.

when should you use a declaration of trust/deed of trust?

Using a deed of trust protects everyone’s interests when buying a property and ensures everyone gets what they’re entitled to when the property eventually sells.

Some of the most common reasons for using a declaration of trust include:

Buying a property as an unmarried couple – Couples who are not married or in a civil partnership do not have legal protection in the event of a separation. Having a declaration of trust means that if the relationship does break down, each party’s contributions will be clearly recorded and easy to return when the property is eventually sold.

Reducing the risk of future disagreements – Although the land registry records joint ownership, it doesn’t account for the proportions that each party has contributed. This means that when the property does sell, it may not be clear who is entitled to what. Stating the involvement of each party in a deed of trust ensures clarity, preventing potential conflict. For this reason, a deed of trust is recommended whether you buy a property with someone as joint tenants or tenants in common.

what should be included in a deed of trust/declaration of trust?

The details in a declaration of trust will depend on your unique circumstances. However, it should include the following core information:

• How much each party has contributed towards the deposit.
• How the mortgage will be paid off and how each party will contribute towards repayments and other costs.
• What percentage of the property will be owned by each party.
• How the proceeds of a property sale should be split.
• How the property would be valued before being put on sale.

We will work with you to ensure your deed of trust accounts for your situation.

when should I instruct a declaration of trust?

Typically, a declaration of trust should be created, agreed and signed before the exchange of contracts on a property purchase, and dated on completion.

It is, however, possible to instruct a declaration of trust after purchase, for example, if someone moves into a home you own and contributes towards the mortgage and bills.