Despite the enduring presence of the "common law marriage" myth, cohabitation alone does not currently offer any marriage equivalent legal rights. However, if the Government's recent proposals proceed, living together for three years or having a child together could, for the first time, give an unmarried partner a statutory right to make a financial claim for themselves on separation – even if neither party is aware of the change when they begin to cohabit.
The Government's consultation, “A Fairer End to Relationships”, published in June of this year, has been described as one of the most significant proposed reforms to family law in England and Wales in decades. The consultation brings together three interconnected areas of potential reform:
This article focuses on the second of these areas: the proposed reforms to the law on separation of cohabiting couples. Although cohabitation is often viewed as a family law issue, the proposals have potentially significant implications for private client practitioners and clients seeking to protect family wealth.
The current law
Cohabitants remain in a fundamentally different legal position from married couples and civil partners. Living together does not, by itself, create marriage equivalent rights or protections. Nevertheless, the misconception persists, and some individuals make financial decisions on the assumption that they will enjoy legal protection if the relationship ends, only to discover too late that they do not.
The issue affects a growing number of families. Cohabitation is now the fastest-growing family structure in the UK, yet cohabitants still have no automatic financial protection and no freestanding right to make claims against one another on separation.
Instead, disputes are resolved through a patchwork of legal remedies, principally property and trust law, together with limited statutory claims where children are involved. For private client practitioners, this has generally meant that familiar planning tools, such as declarations of trust, wills and succession planning arrangements, have operated largely as intended for cohabitees. Legal and beneficial ownership has remained central to the analysis.
A long road to reform
Calls for reform have persisted for many years, driven by concerns that one partner may emerge from a long-term cohabiting relationship in financial hardship despite significant contributions to family life.
The current proposals have their roots in recommendations made by the Law Commission in 2007, which advocated a statutory scheme allowing qualifying cohabitants to seek financial relief on separation based on contributions and economic disadvantage rather than equal sharing of assets.
In 2022, the Women and Equalities Committee renewed the call for reform, recommending an opt-out framework together with greater public education regarding the legal differences between marriage/civil partnership and cohabitation.
The 2026 consultation
The Government proposes a new statutory framework that would apply automatically to couples who:
Importantly, the proposed scheme would operate on an opt-out basis. Eligible couples would fall within the framework automatically unless they actively chose to opt out. This means many couples may become subject to the regime without being aware, highlighting the important role advisers may play in helping clients understand both the implications of the framework and the availability of an opt-out.
The scheme is specifically designed to be needs-based rather than sharing-based. Its focus is on vulnerability, dependency and economic disadvantage arising from the relationship, rather than the equal division of assets.
The starting point of the court’s assessment is that each cohabitant retains the assets in their own sole name. Any financial orders would be made only to meet specific, essential needs, with any discretionary “comforts rather than necessities” excluded, even if sufficient resources are available. This more restrictive approach is intended to create a “further clear and principled distinction from divorce”, to reflect the “different levels of commitment and obligations” in comparison with marriage.
Potential financial remedies include:
Implications for private client practice
The proposed reforms would shift the focus from ownership alone to the wider financial consequences of a relationship.
For eligible cohabitants, the key question may no longer simply be "who owns what?" Instead, attention may be directed towards issues such as financial dependency, career sacrifices, childcare responsibilities and the extent to which one party has suffered economic disadvantage as a result of the relationship.
That shift is potentially significant for clients who have deliberately chosen not to marry in order to protect family wealth, inherited assets or other property, funds or businesses.
While declarations of trust, wills and other ownership structures would remain important, the proposed framework could create a new basis for financial claims that those arrangements were never designed to address. As a result, cohabitation reform has the potential to become as much a wealth-planning issue as a family law issue.
Cohabitation agreements: from an optional extra to an essential planning tool
Historically, many clients have viewed cohabitation agreements as optional, particularly where declarations of trust, wills and broader succession planning arrangements are already in place, but that assumption may need to be revisited if reform proceeds broadly along the lines proposed.
Unlike a declaration of trust or a will, a cohabitation agreement can address matters such as:
These are precisely the types of issues that may become increasingly important if future claims focus on the financial consequences of a relationship rather than ownership alone.
A cohabitation agreement also encourages discussions that many couples might otherwise avoid. A parental contribution towards a property purchase may be viewed by one party as family wealth intended to remain ring-fenced, while the other sees it as part of a shared future. Similarly, decisions about childcare and reduced working hours may have significant long-term financial consequences that are rarely considered at the time they are made.
Recording intentions at the outset can help reduce uncertainty and minimise the scope for future disputes.
Cohabitation agreements do not exist in isolation
As cohabitation agreements become increasingly important, it will be necessary to view them as part of a broader planning exercise rather than standalone documents.
In practice, advisers should consider cohabitation agreements alongside ownership arrangements, declarations of trust, family gifts and loans, wills, trusts, pension nominations and business interests. Each may address a different aspect of the client's affairs, but all should support the same overall objective.
Regular review and ensuring documents are consistent are equally important. An agreement may accurately reflect a couple's circumstances when it is signed but become less suitable following the birth of a child, a significant inheritance, a career change or the acquisition of further assets. The agreement should therefore be viewed as part of an ongoing planning process rather than a document that is simply signed and stored away. Competing documents risk creating confusion and potential for litigation. It is therefore vital that family and private client advice is taken in tandem.
A familiar private client scenario…
Many private client practitioners will recognise the following scenario: "I'm giving my daughter £250,000 to help her buy a house with her partner."
The immediate questions often relate to inheritance tax, capital gains tax, gifting and succession planning. However, the proposed reforms highlight a further issue: what do the couple themselves and the done (and donor) understand that contribution to be?
If that question is left unanswered, the family may have addressed the tax and succession implications while leaving expectations between the couple unresolved. This demonstrates why joined-up advice between private client, property and family law specialists is becoming increasingly important.
Conclusion
The final shape of any legislation remains uncertain. However, the direction of travel is increasingly clear. If the proposed reforms are implemented, future disputes involving cohabitants may focus less on ownership and more on financial need, dependency and economic disadvantage. That represents a potentially significant shift for clients who have relied on ownership structures to protect family wealth.
In short, cohabitation is no longer simply a family law issue. It is increasingly a wealth-planning issue too.
Xanthy Papageorgiou is a Senior Associate and Mediator in the Family team at Sinclair Gibson.
Teya Leacock is a Trainee Solicitor in the Family team.
Molly Claridge is a Trainee Solicitor in the Private Client team.
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