Living Together: Cohabitation Agreements & Declarations of Trust

A family lawyer’s day, more often than not, involves dealing with the ending of relationships. It is therefore welcome respite to work on more positive projects, such as helping a couple in the first flush of love move their relationship to the next stage. That said, few of course can fail to be aware of the statistics around relationship failure. Increasingly, therefore, more and more unmarried people are striving to take the sting out of the tail if their relationship ends by pre-planning separation arrangements - hoping to never have to refer to those plans.

Cohabitation does not confer a specific legal status and so does require aforethought. This particularly if unequal contributions are being made to the purchase or running of a property, and where the available laws consider contributions and intentions in the event of dispute. Over time, contributions and intentions can blur, which is why a document at the beginning can be so valuable if there is an unfortunate end.

Cohabitation Agreements allow a couple to set out living arrangements. As they are intended to be legally binding documents, individuals should make full and frank disclosure and take independent legal advice. The benefit of a Cohabitation Agreements is that it can cover a broad range of day-to-day arrangements to regulate such as:

  • contributions to purchasing a house;
  • contributions to utilities;
  • changes of circumstance, such as unemployment, illness etc;
  • life policies;
  • joint bank accounts or credit cards;
  • car purchases and running expenses;
  • financial arrangements for children post-separation;
  • ownership of gifts;
  • family planning for births, fostering or adoptions;
  • retirement planning.

The main purpose of a Cohabitation Agreement is to establish general living arrangements and give clarification as to whether intention and financial contribution impact upon the legal ownership of a property. Without this evidence, there may need to be a lot of untangling upon separation to determine what might have been intended and contributed - and the outcome may feel harsh to either individual. Cohabitation Agreements can also benefit couples who are renting and want to regulate their financial arrangements.

For individuals purchasing a property in unequal contributions, a Declaration of Trust is also recommended. Declarations enable purchasers to set out their respective contributions towards purchase and whether, upon separation or sale, they will share the equity in similarly disproportionate shares. A common scenario is where unequal contributions are made to deposits with an intention that the mortgage payments be shared equally. In such a scenario, the purchasers may agree that upon sale they each recover their respective deposit contributions and thereafter the remaining equity is divided equally between them. For similar reasons, Declarations can be attractive to individuals being gifted family money who would like to ring fence the return of it at a later date. Declarations can also be used where the property is being purchased by one individual for the benefit of both.

Declarations can additionally capture contributions towards mortgage payments, insurances, policies, improvements and maintenance of a property. Any conveyancer worth their salt will talk to purchasers making unequal contributions about whether a Declaration suits their needs. They are to be recommended because a court does not always have sympathy for purchasers who do not protect themselves legally when they had the opportunity to do so. Whatever has happened in the interim, or whatever protection was ignored at the time, may lead to what one or both purchasers consider an unfair outcome at a later date.

For anyone wondering which document a couple should consider, the answer will often be both unless the purchasers will not be living together. The legal nuance between the two documents is that one is a legal deed that can be registered at the Land Registry (Declaration of Trust), and the other is a contractual arrangement of evidential value (Cohabitation Agreement). A Declaration follows certain legal criteria in a limited framework; an Agreement offers greater breadth and creativity to expand upon the detail of the Declaration.

Cohabitation Agreements and Declarations of Trust give couples clarity and peace of mind and can iron out any quiet wrinkles of worry or concern about financial arrangements and how they may impact in the future. It is far more enjoyable to plan a home and new life together knowing that you and your partner are literally and metaphorically on the same page.

Georgina Rayment
Partner, Head of Family, Mediator