Amber and Greg were the winners of Love Island. Greg was given the option to steal the prize money in full for himself but decided to share it with Amber.
We know now, of course, that sadly they are no longer a couple. But what if they had stayed together, how could they both make sure their interests were protected with this sudden joint financial influx?
A couple suddenly coming into money might have chosen to invest their winnings as a deposit for a property. If they are not married, and each put the whole amount into buying a property then, should they split up in the future provided the property is in joint names, they would each get the same amount out of the property.
But what happens if one half of the couple puts their £25,000 down as a deposit on the property and the other half spends theirs?
If they buy a house in joint names then separate in the future, the equity in the property would still be shared equally between them even though one had originally spent their money. This is because the house is in joint names
So how could the money be protected? There are several ways.
The first would be to enter into a declaration of trust on buying the property to say that when they sell the property in the future, the person putting in the £25,000 would receive the first £25,000 of equity and any increase in equity above that figure would be split between them.
A better option, however, is to enter into a cohabitation agreement at the same time as they buy the property, to say that if they were to separate in the future, the initial deposit belongs to whoever put it down in the first place. The deed would also confirm that any further increase in equity would then be divided equally between them. This would protect that initial deposit.
A cohabitation agreement is a more comprehensive document which can also regulate the terms of the parties relationship. It can include clauses to agree into which account they pay their salary and bills, and most importantly, what happens if their relationship ends. How are their assets to be divided?
If this is sorted out at the start of the relationship it makes things much easier in the event of a separation.
Whilst cohabitation agreements are not attractive to people in love, they are a necessary and sensible document to ensure fairness upon separation for cohabiting couples.