Cohabitation contracts

A cohabitation contract or agreement enables partners who (plan to) live together but are not married or civil partners to regulate their affairs. In the past, cohabitation contracts were held to be void for reasons of public policy. The law recognises that many couples cohabit outside marriage or civil partnership. Such a contract is the best evidence of what was intended by the parties in the event of a subsequent breakdown in the relationship. Former cohabitants may also wish to enter into a separation agreement to regulate the terms of their separation. Cohabitants do not have the same rights to make property claims as married couples or civil partners, therefore disputes between cohabitants regarding their beneficial interests are determined in accordance with the law of trusts. While a cohabitant may not claim maintenance for themselves personally, as a spouse or civil partner may, where the parties have children together, financial provision for any children may be agreed, dealt with under the statutory scheme or in certain cases by an application under Schedule 1 to the Children Act 1989 (ChA 1989).

Terms and drafting

Drafting an agreement demands

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High Court judgment demonstrates usefulness of section 423 of the Insolvency Act 1986 in Schedule 1 claims (Re P (A Child) (Financial Provision))

Family analysis: In this Schedule 1 case the mother received, for her son’s benefit: a housing fund of nearly £1m (the property to be held on trust); child maintenance (including ‘HECSA’/carer’s allowance) until completion of his first degree; and lump sums in respect of his capital needs and her own substantial liabilities (chiefly relating to her unpaid legal fees). The father (whose resources could be measured in the ‘tens of millions of pounds’) had sought to prejudice the mother’s claims via transferring his valuable shares to family members, who then transferred the same into a trust structure (settled under Czech law). A further onwards transfer was then made of the trust’s assets into a Liechtenstein foundation. Inferences were drawn by the court in respect of the level of the father’s wealth, and specifically as to the value of the transferred shares. Detailed findings were made against him in respect of the identified transactions, which had been the focus of the mother’s section 423 application. Although a section 423(2) order was not actually made, the application was adjourned pending the father’s compliance with the award, with security in the sum of £600,000 also ordered, alongside a continuation of the freezing orders made earlier in the proceedings. David Wilkinson, solicitor at Slater Heelis, considers the issues.

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