Why moving in together deserves as much planning as getting married

In our experience, the most difficult disputes rarely arise because a separating couple failed to care about one another. They arise because important assumptions were never discussed. One person believes they are building a shared future; the other believes they are protecting assets they brought into the relationship. Neither necessarily realises that their expectations differ until the relationship has broken down. Having key important conversations before moving in together – talking about the silent assumptions and bringing those discussions to the fore – may be tricky in the moment but may well avoid disagreement and discontent if the relationship were to break down.

Moving in together is an exciting step but it is also an important financial and legal milestone. The assumption that legal rights follow a period of cohabitation may be misplaced; notwithstanding the current Government’s public consultation on the rights of cohabitants, “common law marriage” does not exist in this country and the law treats such cohabitants as unrelated individuals in many respects. Taking the time to discuss property ownership, finances, future plans and expectations in general can help couples start living together with greater confidence and clarity. The following may not all apply to you or your loved ones; consider them simply a prompt for the conversations which should take place before collecting the keys.

Who owns what and how will day-to-day finances work?

If you already own your home and your partner is moving in, you may wish to consider asking them to sign a cohabitation agreement. This can address how future ownership of the property should be addressed (will it remain completely yours or are there circumstances where you would be happy for your partner to have a part share?) and how the household outgoings will be met. If a cohabitant contributes to the mortgage payments, they may later claim that there was an intention for them to share in the ownership of the property, on the basis that their payments had contributed to the equity held. A cohabitation agreement can either provide a framework for such ownership to accrue, within clear parameters, or prevent such a claim being made.

A cohabitation agreement can also address how your family’s day-to-day expenses will be met, including expenses for any children. The agreement can also cover how those expenses might be met in the event of separation. This is especially important if you are the partner who has reduced their working hours to raise children and may not be in a position to contribute 50% of the childcare costs if you go your separate ways.

If you are purchasing a property together, we highly recommend speaking to a solicitor regarding a Declaration of Trust. Unless defined, property ownership is deemed to be 50:50 if there are two legal owners, irrespective of the contributions made to the deposit or the mortgage or indeed any necessary renovations to the property. If the property is being purchased in one person’s name but the other is contributing to the purchase price, a Declaration of Trust is even more essential. The phrase “equity follows the law” means that the legal owner (whose name is on the title deed) is deemed to be the sole beneficial owner (who receives the sale proceeds when the property is sold) unless otherwise recorded in a trust deed. The Declaration of Trust can be varied by agreement at any stage during the period of property ownership but it may be harder to agree to put one in place at a later date if it was not addressed at the time of purchasing the property.

How will the needs of children from a previous relationship be met?

For many of our clients, moving in together is not the beginning of a first relationship but the start of a second chapter. One or both partners may have children from a previous relationship, established wealth structures, existing inheritance plans or ongoing financial commitments. Navigating blended families and competing family interests is a new challenge for couples and early conversations, to identify any differences in expectations, will help avoid the risk of dispute later on. These circumstances often require particularly careful consideration before a couple decides to share a home. A cohabitation agreement may be helpful to set out how the day-to-day costs of such children should be met and whether their parent should contribute more to the running of the house as a result.

Consideration should also be given to financial planning considerations, such as the approach to family businesses, trusts, inherited wealth and succession planning. One partner may wish to ensure that assets eventually pass to their children, while the other may expect a greater degree of financial integration as the relationship develops. Neither position is inherently wrong, but differing expectations can become a source of tension if they are not discussed openly at an early stage. Moving in together provides an opportunity to address these questions constructively and, where appropriate, ensure that arrangements are reflected in a cohabitation agreement, trust documentation or wider estate planning.

Increasingly, we advise clients who are entering a second relationship later in life, often after having built substantial wealth or inherited family assets. Their objective is not to limit the success of the new relationship but to provide clarity about how existing wealth should be treated and how competing family interests can be balanced fairly. Having those conversations at the outset is often one of the most effective ways of protecting both the relationship and the family’s long-term objectives.

What should happen if one of you sacrifices income or career progression for the benefit of the family?

One of the most persistent myths we encounter is the belief that living together for a long period of time creates rights similar to marriage. It does not. Despite the continued use of the term “common law spouse”, there is no such legal status in England and Wales. As a result, individuals are often surprised to discover, following a lengthy relationship, that they have little or no claim against a former partner despite years of financial interdependence, joint family commitments or significant career sacrifices made in the interests of the relationship.

Unlike for financial claims following divorce, the law at present does not provide the right to apply for maintenance from an ex-partner. This is even the case where there has been financial dependence on him or her, or where the financially weaker party has sacrificed their career or reduced their working hours in order to care for the home or the children. This continues to create financial hardship at the end of cohabiting relationships. The recent cohabitation reforms subject to a consultation paper issued by the current Government do seek to address this issue; such reforms are at a very early stage, however, and there is no guarantee that they will become law. We regularly advise clients following the breakdown of long-term cohabiting relationships and have to explain that, despite years of shared finances and mutual commitment, the law provides very limited financial remedies because the couple chose not to marry.

It is, however, possible to enter into an express cohabitation agreement with your partner, either at the start of your cohabiting relationship, or subsequently (such as in anticipation of the birth of a child), which addresses any anticipated financial dependence. Such agreement can include payment of interim support in the event of separation, or pension contributions on the behalf of the partner who has taken a step away from their career. Provided the agreement reached is recorded with the appropriate formalities and both parties have received independent legal advice (or at least have been offered the opportunity to do so), such agreement can be upheld as a binding contract between the parties.

Cohabitation agreements can also address expectations regarding housing and financial support for children in the event of their (unmarried) parents separating during their childhood. This can be particularly important where there is a substantial disparity in wealth between the parties or where one parent may become the primary carer. However, the court will always retain discretion to make financial awards pursuant to Schedule 1 of the Children Act 1989. A cohabitation agreement cannot prevent a parent from bringing such a claim, nor can it restrict the court’s ability to make orders in a child’s best interests.

In our experience, the couples who benefit most from a cohabitation agreement are not those who are expecting the relationship to fail. Rather, they are those who acknowledge that one partner may become financially vulnerable as the relationship evolves. Discussing those issues at the outset can be an uncomfortable conversation, but it is often far easier than trying to resolve them after a relationship has broken down, when expectations have diverged and positions have become entrenched.

Practical considerations

Moving in together should be an exciting step, not one overshadowed by uncertainty. Taking advice at an early stage can help ensure that property ownership, financial arrangements and family expectations are properly documented and understood by both parties. A relatively straightforward conversation now can provide clarity and reassurance for years to come.

How we can help

If you are planning to move in with your partner and would like advice on a cohabitation agreement, property ownership or protecting family wealth, please get in touch with Helen Fisher, the head of our family law team.