Many couples choose to cohabit for years, buy homes together, raise children and combine their finances without ever formalising their relationship through marriage or a civil partnership. While this arrangement may suit their personal circumstances, it is important to understand that the legal position of unmarried couples differs significantly from that of married spouses and civil partners.
One of the most common misconceptions is the belief that there is such a thing as a “common law marriage”. Despite how widely the phrase is used, there is no legal status known as a common law spouse in England and Wales. Simply living together for a long period does not automatically give either partner the same financial rights that married couples enjoy if the relationship ends.
As a result, unmarried couples should consider taking practical legal steps to protect themselves financially. Doing so can provide certainty, reduce the likelihood of disputes, and ensure that each person’s intentions are properly recorded should circumstances change in the future.
The difference between married and unmarried couples
When a married couple or civil partners separate, the family court has broad powers under the Matrimonial Causes Act 1973 and the Civil Partnership Act 2004 to redistribute assets fairly. The court can consider factors such as the parties’ needs, contributions, earning capacity, and the welfare of any children before making financial orders.
Unmarried couples do not benefit from this legal framework. Instead, disputes are usually determined using principles of property law and trust law rather than family law. This means that ownership of assets, particularly property, often depends upon legal title, documentary evidence and the parties’ intentions rather than what may appear fair overall.
For example, one partner may have spent years contributing towards household bills, renovations, or mortgage payments without actually acquiring a legal interest in the property. If their name is not recorded as an owner and there is no written agreement setting out their entitlement, establishing a financial interest can become complicated, expensive, and uncertain.
This difference often comes as a surprise to separating couples who assumed their long-term relationship would provide them with similar protections to those enjoyed by married couples.
Cohabitation agreements can provide greater certainty
One of the most effective ways for unmarried couples to protect themselves is through a cohabitation agreement. This is a written contract entered into by partners who live together or intend to live together.
Although every agreement is tailored to the couple’s circumstances, it typically deals with the following financial matters, including:
- How household expenses will be shared
- Ownership of savings and investments
- Responsibility for mortgage repayments and other debts
- What happens if one partner pays significantly more towards the property
- Arrangements if the relationship ends
A properly drafted agreement provides clarity from the outset and can significantly reduce disputes if the relationship later breaks down. While the courts will consider the circumstances of each case, agreements that have been entered into freely, with independent legal advice and full financial disclosure, are more likely to be enforced.
Entering into a cohabitation agreement encourages couples to have open conversations about finances before disagreements arise. Addressing these issues early can avoid uncertainty later.
Recording property ownership correctly
Buying a home together is often the largest financial commitment a couple will make, so ensuring that ownership is recorded correctly is essential. Where both partners purchase a property together, they can generally choose to own it either as joint tenants or as tenants in common.
Joint tenants each own the whole property together. If one owner dies, their interest automatically passes to the surviving owner regardless of what their will says.
Tenants in common each own a separate share of the property. Those shares may be equal or unequal depending upon the contributions made by each person. Unlike joint tenancy, an owner’s share passes under their will or the rules of intestacy rather than automatically transferring to the surviving co-owner.
Selecting the appropriate form of ownership should reflect the couple’s intentions and financial circumstances. Simply choosing the default option without considering the legal consequences can create difficulties later.
Should couples consider a declaration of trust?
A declaration of trust is a legally binding document that records each person’s financial interest in the property. It can specify precisely how ownership is divided and explain how sale proceeds should be distributed if the property is sold.
For example, one partner may contribute a significantly larger deposit while both contribute equally towards the mortgage thereafter. Alternatively, one partner may pay for substantial renovation works or fund later improvements that increase the property’s value.
Without a declaration of trust, proving these intentions years later may become extremely difficult, particularly if memories differ or documentary evidence is limited.
A carefully prepared declaration of trust provides certainty by recording the parties’ agreement at the time the property is purchased or when contributions change.
Documenting loans between partners
Many couples lend each other money during their relationship, but problems often arise because these arrangements are informal. A common issue is when one partner believes the money was intended as a loan, while the other assumes it was a gift. Drafting a written loan agreement can avoid considerable uncertainty in the future.
The agreement should record:
- The amount being lent
- Whether interest is payable
- When repayment is expected
- What happens if the relationship ends before repayment
Having these terms clearly documented reduces the scope for disagreement and may make enforcement significantly easier if repayment later becomes an issue.
The importance of making a will
Unlike married couples and civil partners, unmarried partners do not automatically inherit from one another if one dies without leaving a valid will. This can create serious financial difficulties, particularly where the surviving partner lives in a property owned solely by the deceased or relies upon shared assets.
Preparing an up-to-date will allows each partner to decide who should inherit their estate and can provide significantly greater security for the surviving partner.
Couples may also wish to consider lasting powers of attorney so that decisions can be made if one partner loses mental capacity.
What happens if there are no legal agreements?
When unmarried couples separate with no legal agreements in place, resolving financial issues can become considerably more complicated.
Property disputes often depend upon detailed factual evidence concerning ownership, financial contributions, and the parties’ intentions throughout the relationship. The court cannot simply redistribute assets because one outcome appears fair. Instead, it must apply legal principles relating to ownership and trusts.
This can lead to outcomes that one or both parties perceive as unfair, particularly where one person has made indirect contributions such as paying household expenses while the other accumulated equity through property ownership.
Taking preventative legal advice before disputes arise is usually far less costly than attempting to resolve disagreements after separation.
When should legal advice be sought?
Many people assume legal advice is only necessary once problems develop. In reality, obtaining advice at an early stage often provides the greatest protection.
Legal advice should be considered before:
- Purchasing property together
- Moving into a property already owned by one partner
- Making unequal contributions towards a property purchase
- Lending substantial sums of money to a partner
- Entering into long-term cohabitation arrangements
Legal advice may also be appropriate if circumstances change during the relationship, such as one partner funding major renovations, paying off the mortgage alone, or receiving significant assets.
Every relationship is different, and the most appropriate legal protection will depend upon each couple’s individual circumstances. Documents prepared at the beginning of a relationship can often be updated if circumstances later change.
If you would like advice on financial protection for unmarried couples, including cohabitation agreements, declarations of trust, property ownership or your legal rights following the breakdown of a relationship, please contact our team today. We will be happy to provide clear, practical advice tailored to your individual circumstances.
Or call us: +44 (0)20 7430 8470