As more couples in the UK choose to cohabit rather than marry, this article considers what happens when break-ups occur and property and wealth disputes arise.

Fiona Turner, a partner in the family law team at national law firm Weightmans, writes about issues arising from cohabiting couples. There remain differences in wealth planning and management issues between married and cohabiting couples in the UK, and this can lead to difficult disputes. We are grateful for these comments and invite readers to respond with their views.

After the month of February and Valentine’s Day, a significant number of couples will be planning their lives together.

Some will marry, some will enter civil partnerships and many more will choose to live together. According to the Office of National Statistics, cohabiting couple families grew by 29.7 per cent between 2004 and 2014. 

There are now 3.2 million cohabiting families in the UK, up from 1.5 million in 2005. This is the fastest growing type of family. Many cohabit with a view to marrying in the future, others choose deliberately to live together and opt out of marriage. There remain significant distinctions between a married and unmarried couple which are not always fully appreciated by the couple themselves, professionals advising those couples or society at large.

However difficult it can be to talk about death and making a will, what can be much worse is dying without one. In addition to the potential for increased distress and administrative burdens on loved ones caused by dying without a will, the intestacy rules will apply, with a fixed list of beneficiaries dictated by the state (simplistically put, family members if there is no spouse or children). It is of vital importance for cohabiting couples to make wills. For these families the intestacy rules provide no protection; if a cohabitee dies without a will their partner will not benefit from their estate.

It remains a popular misconception‎, often erroneously promoted in certain aspects of the press and media, that once a couple have lived together for two, five or more years, they acquire the status of a “common law spouse” and with it, financial remedies on separation arising from their relationship. This is wrong, and we, as family law professionals, continue to work hard to dispel that myth. However, it is wrong to say that in all situations, a cohabitant has no legal rights in the event of a relationship breakdown. 

So what really happens if a cohabiting couple separate? The legal remedies are extremely restrictive and based solely on the law of property and trusts, rather than any element of fairness/discretion, as would apply on a divorce. Unless the couple start a family together, when a different legal regime applies to cater for the financial needs of any children (albeit the regime is not as generous as that on divorce), there is no obligation for one party to support the other with maintenance payments, and there may well be no recourse to any property/a home.  

Living together does not create an entitlement to an interest in a property/home, as many cohabitants discover to their cost and upset when a relationship ends. There may be a claim for a financial interest, depending on property law principles, which can be technically complex and expensive to prove. Is a property owned by one party in their sole name or in joint names? Is there an express declaration of how the property is owned between them, or evidence to show that the parties shared a common/joint intention to own a property together? Has that intention changed over time? Is there a promise, made by one party on which the other relied and acted to their detriment? How should a claim be quantified? As recent cases show us time and time again, success in making a claim depends entirely on the facts of the particular case, how that evidence is presented to the court and so on. 

For many cohabitants, the cost and stress of litigating in the face of an uncertain outcome is too much to contemplate. 

For many separated couples, in the absence of establishing a claim, the economically weaker party, often the woman, can face a poor financial future, possible homelessness, a lack of pension and no income. However, in some cases, the boot is on the other foot, depending on the particular facts in question. The Telegraph has recently reported on the case of a wealthy businessman, John Hoggins, and his Lithuanian ex-girlfriend, Greta Cerniauskaite. Both had been married before, and no doubt Hoggins, if not his then-girlfriend, made a conscious choice to avoid the trappings and responsibilities of a marriage.

The parties lived a lavish lifestyle together. Mr Hoggins bought his partner “the contents of most of the shops in Bond Street", a Bentley, jewels and designer goods. They lived in numerous homes, holidayed in exotic locations and he fatefully bought a £650,000 ($904,794) second home in the village of Sawbridgeworth, in Hertfordshire, in Cerniauskaite’s sole name. He paid for it entirely, with a £100,000 deposit and then met all running costs and mortgage payments. 

When they finally split after a nine-year relationship, Cerniauskaite claimed she had a right to the Sawbridgeworth property. The court has now ruled that the property is - and always was - Cerniauskaite's alone. Judge Ann McAllister found that the money paid by Hoggins was a "gift" by a "remarkably generous, some might say impulsive man”. She found that it was clear from all the evidence that he intended that Cerniauskaite should own the property legally and beneficially. The judge found that “if he could spend £100,000 on what might be described as fripperies, there is no reason to think that a further £100,000 by way of a deposit and further money to pay the mortgage should be put in a different category." 

Cerniauskaite won the day on the evidence, starting with the title deeds being registered in her sole name, and a shared intention that the property was to be owned by her alone.

What lessons should be learned? At the outset, when a property is bought, conveyancers need to delve into the circumstances of, and the story behind the purchase, as do mortgage advisors and financial planners. However uncomfortable or unfamiliar it may be to ask personal questions of a client, failure to do so may well result in a negligence claim. Likewise, if it becomes known that a couple are planning to, or have, started to live together, maybe one of them having moved into a property owned by the other, issues need to be explored and questions raised. 

Can uncertainty be avoided? Yes. Parties may choose to enter into a formal cohabitation agreement. In that document, the parties can define property ownership, beneficial interests, and how to regulate finances both during and at the end of their relationship. A cohabitation agreement, provided that it adheres to contractual principles, is valid and enforceable, unlike a pre-nuptial agreement, which is not necessarily binding on the family court. Like entering into a pre-nuptial agreement, the prospect of negotiating what happens financially on the breakdown of a relationship is, to many, unpalatable. But finances can test even the strongest of relationships, and addressing day-to-day financial management is a sensible precaution, as is self-regulating what happens on separation. Cases can be handled sensitively and carefully and will reduce stress and acrimony if a separation arises.

Despite numerous reports from the Law Commission, advocating a review of financial remedies available to cohabitants, their recommendations have met a lukewarm response from the government. Reform, if any, remains some distance away.

Until then, we as professionals need to actively assist our clients to view their relationships with not only their hearts, but their heads and future financial security in mind.