Depending on the living arrangements made, there are also major differences in the rules applying to financial plans made in anticipation of death, or the potential breakdown of a relationship, and the financial settlement reached by the parties after the breakdown of the relationship.
Our lawyers have considerable experience of advising clients in drawing up orderly and reliable arrangements when entering into a cohabiting relationship. We also possess vast experience of providing advice, and support in negotiations and legal procedures, when a relationship between cohabitants breaks down.
There is no single law governing cohabitation. The financial relationship between cohabitants is to a great extent governed by general legal principles as they relate to private wealth. However, in certain central areas of legal practice special rules applicable to cohabitants have been established, governing for example the formation of co-ownerships and claims for compensation based on the principle of enrichment. When a co-ownership is established, it is the Joint Ownership Act that governs the relations between the cohabitants and the co-owned property. In certain areas special legislation holds sway, of which the most important example is the Household Community Act, which can entitle one of the parties, on the breakdown of a cohabiting relationship, to take over the other party’s share of the home and household effects at market price.
Unlike in a marriage, where joint ownership is usual, cohabitants do not establish a common property ownership arrangement. But cohabitants become the joint owners of objects they acquire together during their relationship, such as their home, holiday cabin, car, boat etc.
Ownership, including whether an asset is owned by one partner alone or jointly, is determined in accordance with general legal principles as they relate to private wealth. Co-ownership is primarily established by contract, but can be supplemented by the special rules governing co-ownership formation that have been developed through legal practice as it pertains to cohabiting relationships and marriage.
If a cohabitant has indirectly contributed to the acquisition, for example by looking after the children or by paying for consumer items, then this indirect contribution may in the circumstances provide grounds for a right of co-ownership.
It is real ownership that is the deciding factor in determining right of ownership – not who is registered as owner in the land register or elsewhere. But the formal conditions of ownership, such as registration, can nevertheless shed light on what the cohabitants have agreed concerning ownership. A cohabitation agreement can also help clarify this.
We recommend that all our clients sign a cohabitation agreement as this will clarify matters and usually helps facilitate a settlement between the cohabitants.
When spouses choose to go their separate ways, a distribution of their assets is normally undertaken.
The parties, having contractual freedom, are basically free to agree to whatever they wish.
In a financial settlement it is usual for cohabitants to first clarify the ownership relationship between them, including who owns what, and the relative ownership share of those assets that they own jointly. Secondly, it must be clarified whether a settlement in accordance with ownership share shall be adjusted by means of a claim for compensation. Thirdly, it must be clarified whether jointly owned assets are to be sold or taken over by one of the cohabitants. In the event of the latter, it is natural to commission a valuation.
We strongly recommend that a financial settlement be set out in a written agreement. This will limit the risk for any uncertainty concerning what has been agreed; it minimises the possibility of a legal dispute and it also establishes predictability so that no new claim can be put forward by a former partner. It also takes a great deal for such an agreement to be waived.
Any disagreements and disputes between cohabitants must be resolved in an ordinary lawsuit. Cohabitants cannot, unlike married couples with a joint ownership arrangement, apply for public administration and distribution.
The support we can provide in family, child and inheritance law is based on our vast experience and specialisation. Our lawyers are skilled in identifying the most favourable outcomes for clients, while safeguarding their interests in the best possible way.