Also referred to as a ‘living together’ agreement, a cohabitation agreement is a legal document entered into between couples who have chosen to live together, which clearly sets out how finances are to be handled and what should happen in the event the relationship ever breaks down.
A cohabitation agreement can establish matters such as how day-to-day finances will be managed, how much each person to the relationship will contribute to household bills and matters such as whether life insurance policies should be taken out. It can cover how the children of the relationship will be supported throughout the relationship and if the relationship ends and how joint assets such as bank accounts, debts and cars are to be split.
In order for a cohabitation agreement to be legally effective, it will need to be executed in the same way as a contract. Both parties must obtain independent legal advice before signing to confirm that it is their intention to enter into the agreement.
The cohabitation agreement must be signed by the couple and witnessed as a Deed. The terms of the cohabitation agreement must not be vague and the agreement must not be made under duress or coercion. In many cases it is also advisable to engage in full and frank financial disclosure to ensure that this is also incorporated into the cohabitation agreement.
There are a number of advantages for a couple living together to have a cohabitation agreement. A cohabitation agreement is a practical and cost effective way to ensure that both parties are protected. It avoids a lengthy timeframe and higher costs in resolving matters by way of negotiation, mediation or even litigation through the courts if the relationship breaks down. It provides certainty for both parties on what will happen in the event of a break-up and it allows for flexibility and freedom for a cohabitee to organise their financial affairs during and after the relationship. It also makes it clear what will be divided but what will also remain solely belonging to a specific party.
Cohabitation agreements are not limited to couples living together, but can also be drawn up to represent an agreement between family members and friends living together.
We at Emery Johnson Astills can provide you with advice on how best to protect yourself if you are cohabiting or if you intending to consider entering into a cohabiting relationship. Should you require Emery Johnson Astills’ assistance please do not hesitate to contact the Family Team on 0116 2554855 to arrange an initial fixed fee appointment.