The number of couples living together in unmarried relationships is on the rise; in November 2017, the Office for National Statistics reported that cohabiting couple families (with and without children) were the fastest growing family type.
Many people believe in the concept of a ‘common law marriage’, where if a couple lives together for long enough they will acquire the same rights as a married couple – this is sadly untrue.
Couples often enter into an unmarried relationship without considering the financial impacts of this way of life. If you are going through a divorce or have recently been through one, you will likely want to know the implications of entering into an unmarried relationship. Above all things, you’ll want to ensure that you preserve any assets or funds received from the divorce for yourself and your children if your unmarried relationship breaks down or you pass away.
Fortunately, there are some simple steps you can take to protect yourself and your unmarried partner when embarking on a new relationship, such as:
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Entering into a Cohabitation Agreement
A Cohabitation Agreement sets out how you and your partner will manage your property and finances and defines what should happen to your assets if your relationship breaks down or one of you dies while in the relationship. This can save a significant amount of stress and reduce the costs that could come from a dispute over such issues. A Cohabitation Agreement provides clarity and allows you and your partner to enter into a relationship with the reassurance of knowing exactly where you both stand.
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Considering your property ownership
It is vital that you think about what will happen to any property that you own. Even if the property is in your sole name, an unmarried partner can make claims seeking an interest in it. If the property is to be held in joint names with your unmarried partner, you should think carefully about whether equal or unequal ownership would be more appropriate. To help protect any property that you have received from your divorce or any property you may purchase following divorce, you must consider how you will own that property, its exposure to claims from an unmarried partner and the documents you should enter into. These can consist of a Cohabitation Agreement or a Declaration of Trust and will help to prevent your assets being dissipated by any claims coming after your death or from the breakdown of a relationship.
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Enter into a Declaration of Trust
A Declaration of Trust is a legally binding document entered into by owners of a property outlining specific interests in the property; this ownership can be equal or unequal. It can be tailored to match your needs and our specialist team regularly prepare bespoke Declarations for clients. A Declaration of Trust often outlines who contributed what to the purchase of the property, how the equity in the property should be divided if the relationship breaks down or how the property has to be sold in the future, among other issues.
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Make a Will
If you do not have a Will, the statutory rules of intestacy determine how your Estate should be distributed. The rules of intestacy do not recognise unmarried partners, which means that without a Will your estate could pass to unintended beneficiaries.
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Marriage revokes a Will
If you do have a Will in place, it is important to know that marriage revokes a Will. If you wish for your Estate to be passed on to your intended beneficiaries, you must either make a Will in contemplation of marriage, or make a Will urgently following your marriage. If you do not make a Will in either scenario, you risk your Estate passing under the rules of intestacy which might mean that it doesn’t reach your intended beneficiaries.