What are the risks if I don't have a Cohabitation Agreement?
If there is no Living Together Agreement, you may find the law overrides your intention. While the problems and concerns of cohabiting couples are virtually indistinguishable from those of married couples or civil partners, the legal remedies are much more limited.
Property - If you are buying a property, you should make it clear to the solicitor dealing with it how you want the property to be dealt with if you separate. If you do not, then anyone who has paid a greater proportion of the price or deposit may find they lose the extra money. Your solicitor should ask you how you want to deal with this, but sadly they sometimes fail to do so, or people do not understand the significance of the question.
Capital Gains and Inheritance Tax - People living together are not entitled to make use of the Capital Gains Tax exemptions that apply to married couples. Any transfer of assets is therefore likely to be liable to Capital Gains Tax. Also anything left in a Will between people living together does not qualify for the inheritance tax exemptions that apply to spouses. This means in the event of one of you dying, the home may have to be sold to pay any capital gains or inheritance tax liabilities. Careful estate planning is required and we are here to help with this.
Maintenance payments – Cohabitees cannot claim maintenance from the other person. Where two people are living together, the legal aspects of their relationship are governed by the general law, along with a number of statutes. You do not have any matrimonial rights, only property rights.
Other problems - Where you are splitting up, you may find one of you wants to keep the home for them and the children and the other person wishes it to be sold. You may also find that liabilities are in your name and the other person is refusing to pay or contribute to these. These issues can be fraught with difficulties and be very expensive to resolve.