Ruling gives equal share to cohabiting couples

Unmarried couples might want to create a DIY cohabitation agreement to protect their legal rights after a landmark case was ruled in favour of an estranged partner.

This week the Court of Appeal ruled in an unprecedented case that unmarried couples are entitled to an equal share of their assets unless there is an existing document, such as a cohabitation agreement, to rule otherwise.

Leonard Kernott filed for his half of a house that he shared with ex-partner Patricia Jones in 2008, 17 years after he left the relationship.

Since 1993 Ms Jones had paid the mortgage on the house that she bought with Mr Kernott in 1985, as well as bringing up their two children.

But when their son turned 18 in 2008, Mr Kernott went to Southend County Court to seek his share of the property.

The court deemed that he should receive ten per cent while Ms Jones could have the remaining 90 per cent, leading him to take the matter to the Court of Appeal, where the decision was overturned by a two to one majority.

In his ruling Lord Justice Wall said: "This is a cautionary tale, which all unmarried couples who are contemplating the purchase of residential property as their home should study.

"The purchase of residential accommodation is perhaps the single most important financial transaction which any individual transacts in a lifetime.

"Cohabiting partners must, it seems to me, contemplate and address the unthinkable, namely that their relationship will break down and that they will fall out over what they do and do not own."

Since their relationship broke up, Mr Kernott had bought his own property, but the judge ruled that no matter how many years had gone by, when the couple parted they had both had an equal share in the house.

They bought their house for £30,000 and it is now valued at £245,000.

Speaking to the Telegraph, Ms Jones said: "It's so unfair, I feel like I could cry.

"It's just an absolute nightmare. How is he entitled to half the value of a house he has not contributed towards for 15 years?

"He never paid any child maintenance, any mortgage or carried out any repairs on the house."

Had they been married and filed for divorce, the couple's assets would have been divided up by the courts.

This case could lead cohabiting couples to consider other assets and finances that they would only be entitled to if they were married or had a legal cohabitation agreement between them.

Financial website examined the validity of pensions schemes for unmarried couples and how they can protect themselves financially.

Anna Sofat, founder and chief executive of Addidi Wealth, explained that there are two aspects to occupational pension schemes.

Scheme members can nominate their partner to receive a lump sum payment on their death.

However, a widower's pension, which is around half of the payment, does not extend for cohabiting couples, although it does for people in civil partnerships.

Ms Sofat added that this is unlikely to change.

People with personal pensions were advised by the expert to look at their pension plan.

Some schemes do allow holders to nominate their partner before death so that they can receive the pension.

However, Ms Sofat said that unmarried couples are at a greater disadvantage than married couples and civil partners in many pension schemes.

Finances between couples can get complicated if there is not a marriage contract.

However, unmarried couples can still protect their legal rights by seeking advice and writing a cohabitation agreement through Lawpack, which would ease financial matters should a relationship end.

Posted by Morag Lyall

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Published on: May 28, 2010

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