The Cohabitation Rights Bill
The concept of ‘Common Law’ marriage is a myth. If you are not legally married or in a
registered civil partnership then your rights of inheritance are limited or nonexistent.
In terms of inheritance you need to make a Will to protect your partner should you die whilst unmarried. Call us on 01752 607040 for further advice.
There are plans to address this situation with The Cohabitation Rights
Bill (the “Bill”), which aims to establish a framework of rights and
responsibilities and provide basic protections for cohabitees similar to those
available to married couples.
1. What if you
have chosen not to marry because you do not want the rights and
responsibilities that come with being a spouse?
2. What if you
have deliberately sought to avoid the paperwork, the jewellery and the general fuss
of divorce should you decide to separate?
A proposed new The Cohabitation Rights Bill decides that the default
position is couples are automatically opted in and so should you wish to
exclude yourself from the framework of the Bill you must expressly opt out of
it. Although the Bill is currently at Committee Stage and not yet on the
statute book, the proposed legislation gives cohabitees three ways to opt out
as follows:
By entering into a…
Opt-out agreement - there are a number of formalities required, not
dissimilar from those which apply to Qualifying Nuptial Agreements (the
Government’s vision for an all-English enforceable pre-nup). Both parties must have received independent
and separate legal advice and understand the operation and consequences of
entering into an opt-out agreement; i.e. that a Financial Settlement Order
(“FSO”) will not be available to them on the breakdown of their relationship.
The parties can agree that an FSO will not be available under any circumstances
or they can apply their agreement to certain assets or situations only, such as
a FSO not being available in respect of the parties’ home, or a FSO being
available only if the parties have a child together. This certainly seems like
a flexible and user-friendly solution. However, opt-out agreements can be
varied or revoked by the court, although only in circumstances where the court
views such an agreement as manifestly unfair to the applicant due to the
circumstances in which it was entered into or an unforeseen change in
circumstances.
Cohabitation agreement - these are a helpful and flexible method of
recording a parties’ intentions about the way they will organise their affairs whilst
they are a couple and/or when they separate. Litigation brought to investigate
parties’ intentions about the legal and beneficial ownership of their property
can be long-running and expensive and to have intentions set out expressly in
an agreement can save time, money and heartache on separation. A cohabitation
agreement may also provide for one party to pay maintenance to the other party
upon a breakdown of the relationship, something which is not currently
available to unmarried couples.
Deed of trust - a deed of trust can be used to show who has a
legal and/or beneficial interest in a particular asset or property. Trust deeds
were historically the main and most popular source of protection for cohabiting
couples wishing to protect their interest in a property where they were both
living. Where beneficial interests are not clearly and plainly set out in a
trust deed, difficulties can arise and the courts are often called upon to
infer the parties’ intentions and construct or imply trusts where no formal
deed was entered into, often years after those intentions were formed, which
can lead to great uncertainty of outcome.
Under the proposed legislation, the court may vary or revoke a
cohabitation agreement or deed of trust “in such circumstances and to such
extent as the court considers appropriate”. Although there are no formalities
or requirements to be fulfilled in entering these latter two types of
agreement, it may be wise to follow the formalities set out in respect of opt-out
agreements to secure the best chance of the agreement being enforced and
avoiding a variation or revocation by the court.
The Cohabitation Rights Bill is currently at the Committee Stage and is
not yet law in force in England and Wales.
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