Cohabitation agreements 'clear up confusion'

Date: Jun 07, 2011

A cohabitation agreement can clear up any confusion about who is entitled to what in the event of a relationship breakdown, according to a property advice column.

One Manchester Evening News reader wrote to the publication about his situation. As a homeowner who had spent "thousands" renovating his property, he was unsure of how to ask his long-term girlfriend to move in with him while protecting his assets at the same time.

The letter highlighted a number of misconceptions about unmarried partners - also known as de facto relationships. It also identified a number of different factors that could potentially complicate the situation.

For example, the girlfriend could develop a claim on the property if she invested in the home or contributed to mortgage payments.

To clear the air, the newspaper recommended considering a cohabitation agreement, which would set out the clear terms and conditions of how assets - including property - should be divided in the event the relationship breaks down.

Cohabitation agreements - like prenuptial agreements for couples - may be a wise idea in a number of circumstances, such as when one partner has accumulated significant assets, runs a business or carries high levels of debt.

Financial adviser Roger Wohlner from Asset Strategy Consultants remarked last month that an open and frank discussion about money and assets is important for any couple to have.

He told the Times Herald-Record that the assets - and debts - each partner brings to the relationship could affect their joint finances in the future. This is particularly true if the pair later plan to make a significant purchase together, such as a home or a car.

This conversation can also help both individuals get a clearer idea of their long-term financial goals, which may include having children, making major purchases and other investment decisions.

An upfront discussion about finances can also help both parties decide how they want to combine their money in the future - the pair may wish to set up a joint bank account, retain their own individual accounts or opt for a combination of the two options.

De facto partners can enter into a financial agreement at any time during their relationship, but it is important to recognise that a number of technical requirements must be met.

An experienced family lawyer can help heterosexual and same-sex de facto couples meet these requirements - including the fact that each party must obtain independent legal advice before the financial agreement is finalised.

To ensure your cohabitation agreement is drafted with care, get in touch with a trusted lawyer who specialises in family law.