Protective mechanisms for couples making life-changing personal decisions within romantic relationships are becoming increasingly popular. We consider the benefits of having agreements in place, whether as an unutilised insurance policy or to provide protection while reducing stress and cost.
It was Valentine’s Day earlier this week, which for some couples may represent a new chapter in their relationship. Some couples may have felt spurred on by the so-called ‘day of love’ to suggest moving in together or to propose. 14 February is also a popular day to actually get married. However, amid the romance and flowers, important legal consequences can flow from these personal decisions and it is important that these are not overlooked.
For those couples moving in together, there may be an impact on any property that one person brings into the relationship. If one party owns a property and a partner then starts to cohabit in that property, if contributions (financial or otherwise) are made in the belief that this is a jointly-owned home, then this could give the non-owning person a claim to that property. Merely contributing to utilities will not give an automatic right to a financial interest in the property, but if contributions are made towards refurbishments or mortgage repayments, then this could become problematic if the relationship breaks down.
If a couple decide to purchase a property together, it is important to record how the property should be owned. If unequal contributions are made to the deposit and/ or mortgage repayments, then this should be properly set out at the point that the property is purchased. If both parties will be renovating or refurbishing a property, they should think about how this would affect their respective rights in that property. Consideration should also be given to how the daily expenses will be met; the way that a couple conduct their financial affairs can result in an inferred or imputed intention to change how the property is beneficially owned.
Litigation arising upon the separation of unmarried couples can be complicated, lengthy and extremely expensive. Having a Cohabitation Deed or Living Together Agreement in place can help in the event of a relationship breakdown. While there are fewer claims made against cohabitees than spouses, the law in this area is unsatisfactory and there is little certainty of outcome. ‘Common law marriage’ is not recognised by the English legal system. This can result in one or both parties dealing with difficultly upon separation. An agreement can also be helpful in assisting unmarried parents to know what the custody arrangements will be for their children if the family separates, and what financial provision the children should receive. With recent ONS statistics showing that more children are born outside of marriage than within, the role that Living Together Agreements play is becoming increasingly more important.
If a couple decide to become engaged, they ought to consider how a marriage will affect their circumstances, as upon marriage spouses gain automatic rights against each other’s capital, income and pensions. This automatic right represents a significant change to the treatment of assets for an unmarried couple. If one or both parties have assets or wealth that has accrued outside of their relationship or marriage, then this should be properly protected; the best way to do so is with a Pre-Nuptial Agreement.
Protective documentation can set out how the parties intend to conduct their financial affairs and give clarity as to financial provision throughout the relationship or division upon separation. The documentation should also set out when there should be a review of that documentation. If a couple consider that an agreement governing their financial relationship is required, it is important to be transparent as to respective financial positions and for both parties to receive independent legal advice. Timing is also key, as any protective documentation should always be negotiated and signed in good time before any major life events.
Despite the potential for protective mechanisms to be perceived as cynical or unsavoury, they are becoming increasingly popular. If Cohabitation Deeds and Nuptial Agreements are being prepared correctly, they provide the proper protection that is intended. Appropriate legal advice at an early stage should be obtained, as it can provide great support and assistance in the long run. Hopefully, such legal agreements will be in place as an insurance policy and not need to be utilised, but in the event of future separation, they can save additional stress and cost.