Cohabiting couple? Don’t trust your business to luck

It is a myth that living with a partner for a significant period of time automatically confers on a couple the same rights as their married counterparts. Cohabiting couples are not ‘common law husband and wife’ – this concept ceased to exist in 1753.

Living together as a couple, or cohabitation, is a lifestyle choice for over four million couples in England and Wales. As the law presently stands, this means a significant and growing number of couples have fewer financial rights and responsibilities than those who marry or form a civil partnership.

A report from the Office of National Statistics indicates around half of those cohabiting for 10 years have married each other, just under four in 10 have separated, and slightly over one in 10 are still living together as a couple. Despite Law Commission recommendations that cohabiting couples should be entitled to inheritance rights after two years of living together and the same rights as married couples after five years, there appears no firm intention to introduce any reforms.

Cohabiting couples who run a business, own property and other assets need to be aware that in the event of a relationship breakdown the law treats each party as two unrelated individuals with no automatic share of any property, though there are rights to claim maintenance for any children.

There are many quite simple methods of everyone being protected with the added advantage of certainty in the business and domestic circumstances.

All business should have an agreement to reflect ownership rights. There is rarely a good reason for only one of the couple to be referred to on all the legal and corporate documents.

Make a will to set out what should happen to the assets and consider the tax implications. If one partner dies, the other will not inherit their assets unless a will has been made to that effect. It’s essential that cohabiting couples know how to protect themselves, their partner and their business from the legal and financial complications which can arise in the event of separation or death.

Agree to sign a legally binding Cohabitation Agreement that sets out what will happen to property, business and other assets, should the worst happen. Whilst this may seem cold hearted, no one know what the future holds – and the stresses of running a business with a life-partner could just as easily drive a wedge between the couple as it could bring them closer together.

A Cohabitation Agreement states how property, a business, personal belongings and savings should be split so the rights of each are protected should the relationship break down. Cohabitation agreements offer more protection than pre-nuptial agreements, which are still not binding in the courts in England and Wales despite the Radmacher ruling.

Long term security and peace of mind can be achieved by setting down your intentions clearly at the start. Don’t trust your business to luck when it can be protected by law.


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