In a time when couples living together are the fastest-growing family type in the UK, it is important to have the right documents. This helps protect your property and relationship interests in the future.
It is common for couples to formalise their relationship by buying their first property together. Experts often advise them to protect their interests with a Declaration of Trust or a Cohabitation Agreement. Knowing the practical differences between these two legal agreements is important. This will help you choose which one is better for your future relationship needs.
What is a Declaration of Trust?
A Declaration of Trust records the proportions in which a property is held, whether by reference to fixed amounts or percentage interests. They are commonly used when two or more people purchase a property to record the contributions they have made to the acquisition, ensuring their interests are protected. As a result, a Declaration of Trust is often seen as a cost effective option for dealing with specific property interests.
Key features:
- Specifies the exact financial shares each party holds in a property.
- Provided they are correctly executed, they are legally binding.
- Cost effective option
What is a Cohabitation Agreement?
A Cohabitation Agreement is a more comprehensive legal document utilised by couples who are living together or intend to live together, to formalise their cohabitation. The purpose of a Cohabitation Agreement is to regulate each partner’s rights and responsibilities to one another, which is to include the way in which the property or other assets are held by them and what rights and responsibilities they should have in event of a breakdown in the relationship.
Contrary to widely held beliefs, the concept of a ‘common law marriage’ does not exist under the law of England and Wales, which means cohabitees have very few legal rights in the event of a relationship breakdown. A Cohabitation Agreement can help to fill this void by ensuring the parties have the opportunity to put in place a clearly agreed position to help them manage a future separation, in what can otherwise be an extremely stressful and acrimonious process.
There is no time limit for obtaining a Cohabitation Agreement and so that fact that you and your partner are already living together is not a barrier to deciding to put an agreement in place.
Cohabitation Agreements are generally more expensive than Declaration of Trusts to prepare, due to the wide range of issues they can help to address and the recommendation that both parties seek their own independent legal advice when entering into it.
Key features:
- Issues a cohabitation agreement can cover:
o Jointly owned and separate property or assets
o Payment of household expenses
o Inheritance
o Gifts
o Debts
o Financial support to one another
o Relationship breakdown
- Can also specify what should happen in the event of children being born into the relationship
- Generally, more expensive than a Declaration of Trust
- Offers clarity and avoids potentially costly litigation
- Both parties should seek their own independent legal advice
Giving you the full picture
A Declaration of Trust or a Cohabitation Agreement can offer peace of mind. Both options help reduce the risk of costly disputes. They are useful whether you are sharing a home, building a life together, or investing in further property.
If you want to discuss either option, our Family Law team can help. We will explain your choices and give clear, practical advice tailored to you.
