Common law marriage myth can sting finances
Feb 6 2010 by Peter McCusker, The Journal
ACCORDING to statistics, 14% of couples in the UK currently cohabit without being married.
Over the last 20 years there has been a dramatic change in the family unit, with many couples now living together prior to marriage, or choosing not to marry at all.
However, the legal position for an unmarried couple cohabiting is very different to married couples and it is important to be aware of this, as it may have significant financial ramifications if a relationship breaks down.
The erroneous concept of a “common law marriage” is, unfortunately for some, a myth.
Unlike when dealing with the separation of married couples, the court does not have discretion to adjust the ownership rights of the property of cohabiting couples, unless there are children to that relationship.
As cohabiting couple may find it extremely difficult to demonstrate that they have a stake in their property unless they have entered into a legal agreement confirming how their property is to be held and giving clear details of the contributions made to the purchase price.
Equally, if a property is purchased in joint names, couples will each have an equal interest in the property, regardless of the level of contribution to the purchase price one owner may have made.
Cohabiting couples should therefore consider recording their intentions, to avoid any disputes.
Given that national statistics indicate that the median duration of a cohabiting couple is two years, after which time they either marry, or separate, a legal agreement would be advisable.
In the first instance, couples should consider how any property they purchase will be owned. If the property will be owned in unequal shares, the couple must consider purchasing a property as tenants in common rather than as joint tenants. A simple Declaration of Trust can then be prepared and signed by each party to record the percentage of their interests in it and they should also they have a valid will.
Unmarried couples could also enter into an agreement setting out arrangements to apply whilst they are living together. A cohabitation agreement can include provisions in relation to joint bank accounts, the payment of household bills and agreement as to what will happen to the property in the event of separation. If prepared by a legal representative, these agreements can be legally binding in respect of certain property and financial matters.
Couples also need to be aware of their legal position relating to their property. So long as a cohabiting couple plan and note their intentions when living together, their wishes can be carried out upon separation or death to avoid the need for court intervention.
The introduction of the Cohabitation Bill, currently being reviewed by Parliament, may impose legal rights on unmarried couples, however, whether it is appropriate to impose statutory authority on couples who have opted not to marry is still a matter for debate. It may well be that an opportunity for cohabiting couple to contract out of the statute may be introduced to avoid this.
For more information, contact solicitor Rachel Donald at Dickinson Dees on 0191 230 8806 or at rachel.donald @dickinson-dees.com
