Cohabitation Agreement vs Deed of Trust
April 2025
When couples choose to live together without getting married, it’s important that they consider how their financial affairs and property rights are structured. Many people assume that living together gives them similar legal rights to married couples, but this is not the case. In the event of a separation, unmarried couples have very limited legal protection unless formal agreements are put in place. Two of the most common ways to protect your interests are through a cohabitation agreement and a deed of trust.
This summary provides general information and does not constitute legal advice on any individual circumstances.
What is a Cohabitation Agreement?
A cohabitation agreement is a legal agreement between couples who live together. It sets out how they will share finances while living together and what will happen to assets, debts, and responsibilities if the relationship ends. It can cover a wide range of matters, including ownership of property, household bills, bank accounts, pets, personal possessions, and arrangements for children.
This agreement can help to avoid uncertainty and disputes if the relationship breaks down, particularly where significant financial contributions are being made by one party. It is a flexible document tailored to the couple’s individual circumstances and can be particularly useful if one person is moving into a home owned by the other, or if they are purchasing a property jointly with unequal contributions. It can also provide reassurance where family money has been used for a deposit, or where one person is taking a career break to support the household.
What is a Deed of Trust?
A deed of trust (also known as a declaration of trust) is a specific legal document that sets out the financial interests in a property. It is commonly used when a property is purchased in unequal shares, for example, if one person provides a larger deposit or contributes more to the mortgage.
This agreement will detail each person’s share in the property, how proceeds should be divided if the property is sold, and how any contributions such as mortgage payments or renovations are to be accounted for. It can also protect gifts or loans from family members used in the purchase, ensuring clarity and avoiding future disputes.
While a deed of trust is limited to property ownership, it can be used alongside a cohabitation agreement to provide comprehensive protection for both parties, particularly where their financial situations or contributions are not equal.
Which One Do You Need?
The right agreement depends on your situation. If you are living together and want to set out financial responsibilities during your relationship as well as what happens if you separate, a cohabitation agreement is the broader and more appropriate document. It can include terms about property, but also covers day-to-day finances, household bills, debts, personal belongings, and wider lifestyle arrangements such as childcare, support, and shared responsibilities.
If your main concern is about recording how a property is owned, particularly when contributions are unequal or involve third parties such as family members, then a deed of trust is the more suitable option. In many cases, couples benefit from having both documents in place, particularly when buying a home together while unmarried, as this offers long-term protection and reduces the risk of future disputes.
How Can Fullers Help?
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