If you are living with someone else as a couple or intending to do so it is prudent to consider your legal position carefully. It may not seem very romantic …… but plans made properly now may save a lot of heartache, expense and worry later.
Jointly owned property:
If you and your partner intend to own property jointly you will be given the option to hold the legal title in one of two ways:
Tenancy in Common:
In these circumstances the interests of the joint owners are separate and distinct. A note will be made on the Land Registry record confirming this – known as a “restriction”. There may or may not be a formal Deed of Trust recording each parties entitlement. Should one owner die – their share will not automatically pass to the survivor.
In these circumstances there will be no formal division of the joint owners interests in the property – by for example a Deed of Trust. In the event that one owner should die their share in the property will pass automatically to the survivor – regardless of the provisions of their Will.It may seem simpler to hold the property as joint tenants. In light of a recent court decision (Stack v. Dowden) we would usually advise that you hold as Tenants in Common with a Deed of Trust expressly specifying your respective interest in the property. Stack v. Dowden decided (amongst other things) that if property is held in joint names and there is a later dispute about ownership the court will start from the assumption that each party is equally entitled to share the value in the property. This may be unfair if for example the parties have made unequal contributions.
If you are intending to purchase a property jointly with another consider the following questions:-
- How is the purchase being funded? Will each party make identical contributions of capital – or contribute equally to any mortgage?
- How do you intend to share any uplift (or decrease) in the value of the property? Options might include equal division or division according to the extent of each party’s contributions.
- What do you intend should occur if one of you should die? Options include arranging for the deceased owner’s share to be passed to the survivor either outright or by providing for a continuing right of occupation. In these cases there may need to be consideration of life insurance – to ensure that any outstanding mortgage can be redeemed. You may need to plan testamentary provision to ensure the needs of your surviving co-habitee are met – together with those of any other dependants or loved ones – such as the children of a previous relationship or others who might bring a claim against your Estate.
- What do you intend should occur if there is any unforeseen change of circumstances – such as ill-health preventing one of you from working or other loss of capacity. Consideration may need to be given to the creation of Lasting Powers of Attorney (see separate detailed note) and appropriate insurances.
- What do you intend should happen if the relationship breaks down? If agreement cannot be achieved the court may intervene to determine whether or not the property should be sold and who has rights of occupation in the interim. Tailor made advice as to the circumstances of each case is necessary – but advanced planning and professionally drafted documents can alleviate uncertainty.
Solely owned property:
Even though a property occupied by two co-habiting partners may be held in the sole name of only one it is possible that later the other party may acquire an interest in the value of the property – by a number of means including by reference to an informal understanding between the parties and acts of reliance or contribution deriving from this. In this situation a Co-habitation Agreement may be extremely useful to crystalise the parties' thoughts and intentions and so avoid potential disputes.
If one of you were to die without having made provision in a Will for the other (i.e. intestate- see separate briefing note) the deceased’s Estate will pass by a process of priority laid down by law to members of their family. This could leave the surviving partner potentially homeless and financially vulnerable. In certain cases the surviving partner might have a claim against the Estate under the Inheritance Act (see separate note “contested Wills”) – surely it is better to avoid these risks altogether? These matters may be addressed by the preparation of an up to date Will and consideration of financial planning such as life insurance.
We sometimes take our good health for granted. We are all statistically likely to lose the ability to work or to manage our affairs – by virtue of age or illness at some stage in our life. It makes sense to plan for this by considering a Lasting Power of Attorney and reviewing your financial arrangements. In order to tackle these issues effectively you need to be able to access advice from a variety of legal specialisms – property law, family law and Wills and private client. You may also need advice on taxation and financial planning issues.
It is an urban myth that co-habitation with a partner for a certain amount of time gives each party the same rights as a couple who are formally married. This is not so. On the breakdown of a common law relationship a Court has no power to make Orders for the sharing of capital or pensions on a discretionary “needs” based approach as it does within a divorce. Questions concerning interest in family property are dealt with as set out above – although the Court does have discretion as to when a property is to be sold and who may occupy it in the interim. A deferred sale is common where there are children – but this can still result in significant injustice. A Co-habitation Agreement created at the outset of a relationship may be useful.
At Lawson Lewis Blakers we are able to advise you in relation to:-
Wills – Lasting Powers of AttorneyOwnership of land/Declarations of TrustCo-habitation Agreements
Disputes concerning land or Administration of Estates – upon death or dissolution of a relationship.We are able to work closely with your existing independent financial adviser or to make a recommendation to ensure that your future needs are planned for comprehensively.