Whether they are married, unmarried or in a civil partnership, couples may decide that they can no longer live together. In this circumstance, they generally do not want to have a disagreement about finances or children. A married or civil partnership couple may not yet have decided they want a divorce or dissolution, and have decided instead that they want a break.

A separation agreement is ideal if you have agreed your arrangements such as what is happening about the family home, who will pay the ongoing commitments towards bills, and what the arrangements for children are. It would set out the agreement reached at the end of the relationship, and is advisable when assets are divided.

A separation agreement is not legally binding, but if it is drawn up properly, with independent legal advice, the court is more likely to uphold it.  However, the court may not uphold it if:

  • One or both parties have not had legal advice
  • There was duress to sign the agreement
  • It is unfair on one of the parties
  • Financial disclosure was not complete

You should include within a separation agreement:

  • Details of the length of your relationship
  • What you will do about a divorce or dissolution
  • What will happen to your assets and liabilities
  • What are the arrangements for children (see parenting plan)
  • How you will deal with post-separation assets or liabilities.

If you agree to a divorce or dissolution of your relationship, it can replicate the details of the separation agreement within a draft financial order, for the court’s approval.

Unmarried Couples

Unmarried couples do not have the same legal protection as married and civil partnership couples.  Legally, there is no such thing as a common law husband or wife in England and Wales.  This is in stark contrast to matrimonial law, which applies when couples are married or in civil partnerships.  This impacts on a number of areas, including ownership of property, income and lump sum claims, and pension entitlement.

Many couples who move in together do not appreciate the impact that that relationship may have on their finances if they have not considered the law. It is essential that couples know what their financial rights are and try to safeguard them.

Safeguarding Interest

There are a number of ways in which interests can be safeguarded.

  1. A living together / cohabitation agreement
  2. A Declaration of Trust. Whenever parties are purchasing a property either jointly or in the sole name of the other, a Declaration of Trust should be entered into alongside a cohabitation agreement. A Declaration of Trust deals with the shares that each respective party has, in respect of a property or properties.  It is an essential document, because it sets out very clearly what each party’s interests are.  If there is no express declaration of trust, and the parties are in dispute in the future, a court may determine their shares in accordance with the law under the Trust of Land and Appointment of Trustees Act 1996.

Wills

If one party of a cohabitating couple predeceases the other, there are no automatic rights to the survivor unless there is joint ownership of the property, or the survivor is the sole legal owner.  A Will protects the survivor of the relationship, without which there will be uncertainty and additional stress.

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