Busting the myths of cohabitation

Unmarried couples are not offered the same protection as married couples and civil partners. Cohabiting couples often assume that moving in together creates similar rights and responsibilities as marriage (so-called ‘common-law marriage’) or absolutely no rights at all. Both beliefs are wrong. If you are moving in together, or you are the parent of someone in that position, you should know how cohabiting affects your/their legal position and what protections there are should the relationship end or one of the cohabitees dies. David Anstee, our specialist family solicitor, explains…

Common law marriage
The concept of common-law marriage has no legal validity in England and Wales. Moving in together does not give you automatic rights to each other’s property, no matter how long you live together. And if your partner dies, cohabiting does not entitle you to inherit. Conversely, however, if a cohabiting couple separates and there are children involved, both cohabiting partners may have rights and responsibilities, even if only one of them is the biological parent.

Moving in together: Cohabitation rights
Cohabitation does not automatically give you rights to the home you share. Problems can occur, particularly when one of you moves into a property the other owns or rents. If the property is rented, only the tenant(s) named in the rental agreement generally has the right to live there and the responsibility for paying the rent. If you are not a named tenant:

  • You are likely to need the landlord’s consent to move in
  • The named tenant can ask you to move out at any time (after giving reasonable notice)
  • You have no right to stay if the named tenant decides to leave (though you might be able to agree a new tenancy with the landlord).

Similar rules apply if the property is owned by one of you. The property owner is the only one entitled to live there. Anyone else can be asked to leave. The owner can also make decisions, such as selling the property, without consulting their partner. However, even where only one of you owns the property, the other may have some rights (eg: to a share of the money if the property is sold). This can happen if:

  • The owner has agreed in writing that the non-owner is entitled to a share of the home
  • The non-owner contributes financially (eg: paying part of the mortgage) to the property on the understanding that this entitles him or her to a share
  • The non-owner has acted to their own detriment (eg: giving up a job) on the understanding that this entitles him or her to a share
  • A partner with children applies to the court for the right to continue living there to ensure the children’s welfare.

Owning a property in joint names can help to protect the rights of both cohabiting partners but there are potential pitfalls. For example:

  • You cannot force your partner to sell the home if you decide to leave, unless you apply for a court order
  • Even if you contributed most of the costs of buying the home, you would normally only be entitled to a half share, unless you have agreed otherwise
  • If your partner leaves you, you are likely to be liable for the full amount of any mortgage payments.

If you are buying a property together, you might consider something called a declaration of trust. This will confirm contributions to the purchase price, purpose of the property, when the property should be sold and division of the proceeds if you split up.

Cohabitation: Possessions and finances
Cohabiting couples have no legal duty to support each other financially, either while you are living together or if you separate. Nor do you automatically share ownership of your possessions, savings, investments and so on. In general, ownership is unaffected by moving in together. So:

  • If you already owned something before you started to live together, it continues to be your sole property
  • If you buy something yourself using your own money, it is your property
  • If you buy something together, you own it in the shares that you each contributed to the purchase price unless agreed otherwise
  • If your partner gave something to you as a gift, you own it (though proving that a gift was made can be difficult unless there is written evidence).

A written cohabitation agreement can help avoid disputes: for example, by setting out how much you each contribute to a joint account and how ownership of any items bought using the money will be shared.If you have any debts in joint names (eg: credit cards), you are normally each liable for the debt. If your partner fails to pay, you can be pursued for the full amount. You may also both be liable for household bills.

Moving in together makes no difference where taxes are concerned. They continue to be assessed in the same way as any other individuals. However, any benefits you claim will be assessed on the basis that you are a couple. This means your partner’s income will be taken into account and your entitlement to benefits may be reduced.

Cohabitation and children
Legally, you only have a role in important decisions about children (such as their education and religion) if you have parental responsibility for them. If the parents of children are not married, only the mother automatically has parental responsibility. The mother’s partner only has parental responsibility if:

  • He is named as the father on the birth certificate (for a child born after December 2003)
  • He enters into a parental responsibility agreement with the mother, obtains a parental responsibility order or child arrangements order, or they get married;
  • He is registered as the child’s guardian and all other individuals with parental responsibility have died (including the mother).

If a cohabiting couple separate, different considerations apply:

  • Decisions about who the children should live with and what contact rights the other should have are based on the children’s best interests rather than on who has parental responsibility.
  • If your children live with your former partner rather than you, you may be required to pay maintenance.

The same principles apply for stepchildren whom you have treated as part of your family and helped to support financially. Ideally, childcare arrangements will be agreed between you but either of you can apply to the court to help resolve things. In effect, children are treated in the same way as when a married couple divorce.

What happens if a cohabiting partner dies?
Cohabiting partners have no automatic right to inherit if their partner dies, although they may be a beneficiary under the other’s Will. If you are a beneficiary, any assets you receive may be subject to inheritance tax. There is no exemption for unmarried couples. If you have lived together as man and wife for at least two years or if you can show that you were financially dependent on your partner, you can make a claim for a financial settlement even if you were not a beneficiary of the Will.

However, making a claim on the basis of a common-law marriage like this can involve a complex and expensive dispute with the other beneficiaries. And even if you are successful, you may only be entitled to a limited share of your partner’s assets.

If you owned your home together, the form of legal ownership has a major impact. If you owned your home as ‘joint tenants’, you will automatically continue to own the (entire) home if your partner dies. But if you were ‘tenants in common’, your partner’s share is dealt with under the terms of his or her Will. If you rented your home, your rights to stay depend on the type of tenancy, whose name(s) it is in and your landlord.

You will not be entitled to state benefits such as Bereavement Support Payment or a state pension based on your former partner’s National Insurance contributions. Whether you have any entitlement under private pension or life insurance arrangements depends on whether the particular scheme’s terms gives rights to a cohabiting partner.

Cohabitation agreements
Written agreements can help to protect you from potential risks if you separate or your partner dies. Drawing up a cohabitation agreement can help you think through some of the key issues in your relationship. Though not all of the agreement may be legally enforceable, it can help reduce the likelihood of disputes and make any disputes easier to resolve. For example, an agreement might cover issues such as how bills will be shared, whether you will have any joint accounts, and what roles you will each have in terms of childcare, household chores and so on.

Other possibilities include:

  • Clear arrangements covering ownership of the home and what rights each of you have to live there
  • Taking steps to get parental responsibility for children
  • Appointing each other to hold a lasting power of attorney (so that if one of you is no longer capable, the other can take decisions on his or her behalf)
  • Reviewing your Wills and ensuring that you have each made appropriate provision for the other
  • Checking – and, if appropriate, changing – key financial arrangements such as pension schemes, life insurances, savings and investments.

Choosing a law firm? Why it’s smart to keep it local

There are many benefits to using a local solicitor rather than a remote or online service supplier. The most obvious one is that you are in the same area, which makes certain stages of the transaction – for instance producing identification documents at the start of your matter or signing documents when you are edging closer to that dream move – much easier to deal with. Having a solicitor ‘on your doorstep’ will make these sometimes tedious and time-consuming tasks easier to complete. Solicitors that practice in the local area may also have strong links or relationships with other property experts in the area, which can be invaluable throughout the conveyancing process.

But isn’t it cheaper to use an online conveyancing firm?
Not always. You have to be very careful when comparing quotations from solicitors that there aren’t any hidden extras. Solicitors fees that sound too good to be true generally are too good to be true.

Can’t we just deal with everything via telephone and email?
Legal documents such as contracts and transfers have to be signed by hand. In some cases, these documents need to be witnessed, and that is something your solicitor can do for you if he or she is local. By using a firm out of your local area the process of signing documents would have to be dealt with using the postal service. Many conveyancing transactions are time-pressured, so a quick visit to your solicitor to sign can help you achieve your desired completion date. Your solicitor must also verify your identity for every transaction, and check where your money is coming from if you are buying. This can be done online but verifying your identification this way carries additional costs.

Can I do my own conveyancing to save costs?
It is our strong advice that you should always instruct a suitably qualified conveyancer to conduct your sale or purchase. Conveyancers have trained for several years to become experts in the law and the conveyancing process. It is simply not worth the risk.

How can I tell which firm is right for me?
There are a number of key things to look for when deciding which firm to use. To name a few:
* Is the firm regulated by the Solicitors Regulation Authority or other licenced body?
* Has the firm provided you with a clear indication of costs?
* Has the firm been awarded the Conveyancing Quality Scheme (CQS) accreditation from the Law Society?

For many, moving house can be a stressful and daunting prospect. It is therefore vitally important that you instruct a conveyancer you can trust to do the best job possible and to act in your best interests. Choose a firm that has a good reputation, is experienced and has qualified lawyers and, most important, a firm you feel comfortable dealing with. A firm like KWW Solicitors, perhaps.

Why we need to check your identity before we begin

The vast majority of our clients would never dream of doing anything illegal. However, a very tiny number of individuals may try to launder money through our accounts by instructing us to undertake work for them which at first sight appears legitimate but which is actually part of a process designed by them to hide the proceeds of criminal activity.

When we act for you, we are obliged by the Proceeds of Crime Act to ask you to provide us with proof of your identity and address. We may have to do this even though we have acted for you before. We may also have to ask you to provide further information about transactions which you instruct us to undertake on your behalf. We hope you will not find these requests to be intrusive and that you will appreciate why this is necessary.

The Proceeds of Crime Act places all solicitors under extremely strict rules to ensure criminals and terrorists do not try to use us as a way to launder money derived from criminal activities. One of the ways we do this is by being absolutely certain who we are acting for and precisely what the purpose of any transaction is. Failing to spot money laundering when we should can lead to us facing criminal charges so we take this issue very seriously.

All partners and employees of KWW Solicitors have been trained to spot attempts to launder money or other illegal financial transactions. They also undergo regular training to ensure their knowledge of this area is kept up to date. KWW also has a dedicated partner who acts as the firm’s Money Laundering Reporting Officer. He has responsibility for the firm’s anti-money laundering policy and acts as our liaison with the National Crime Agency (NCA).

All solicitors firms, accountancy firms, banks and other financial institutions have a legal obligation to ensure they have procedures designed to combat money laundering.

Private Individuals
When acting for you we are required by law to check your identity and we may also wish to confirm information about your credit status. To verify the information you provide, we may make searches about you with a credit reference or fraud prevention agency; this will include information from the Electoral Roll. The agencies will record the details of the search and other organisations may share these searches to prevent fraud and money laundering. Scoring methods may be used as part of this process.

We will ask you to supply original documents as confirmation of your identity, address or both which we will use along with any electronic checks we perform. Any documents provided to us will be recorded and copied for audit purposes as part of our Anti-Money Laundering requirements. Suitable items for the proof of identity could be a current passport or driving licence, and for the address, a utility bill, council tax bill or bank statement that is no more than three months old. We may also require supporting evidence of the source of any money involved, for example bank or building society documents, and full details of any third party to whom you may instruct us to send funds.

Corporate and other business clients
Before we can act on behalf of a company we will need to verify and identify the existence of the company including its name, business address, registration number and the names of at least two directors through the certificate of incorporation and/or details from Companies House. Additionally, we may request to see Annual Accounts and Incorporation documents and where necessary a suitable resolution confirming that the persons who are representing the company are properly authorised.
We may require supporting evidence of the source of any money involved, for example bank or building society documents, and full details of any third party to whom you may instruct us to send funds.