As you may already be aware, if you aren’t married or within a civil partnership, making financial claims can become complicated.
Unfortunately, if you decide to part ways with your partner, or if one of you passes away, you may not be entitled to the same financial rights as a married couple. This can lead to a lot of heartache, especially if you have invested a reasonable amount of your own money into shared structures, such as a property or other assets. There can be a lot of financial unfairness. Often, solicitors have to break the news to many broken couples that their rights are almost non-existent.
Agreeing to live with your partner, and pooling your resources, can make a lot of sense financially…for the short term, at least. However, if you decide to separate, working out who is eligible for what can get very difficult. Drafting up a cohabitation agreement is a simple way to outline who is responsible for what financially, and what each of you will receive, should the relationship deteriorate. It’s always worth doing, especially if you share some expensive assets.
Cohabitation agreements are also important if children are in the equation. It’s best to set out who will pay what to support the children, should you split up, and who will become the primary custodian.
Buying Your Home Together
When finding your first home, it’s important to build sound legal structures to protect yourself. Even if the property is in your partner’s name, but you are helping to pay for the mortgage, you could be eligible for nothing, if you break up or your partner passes away. There needs to be a clear agreement, contractually, how much of the house is yours , and how much of it belongs to your partner, otherwise you may leave with nothing.
Where there's a Will, there’s a way
A will protects your partner, should you pass away. It’s never too early to draw up your will, if you are cohabiting and either of you stands to lose out financially. You may think that your assets will automatically pass to your partner, but this isn’t true. In fact, it’s more likely that everything will go to your family members, leaving your partner with nothing. Be sure to set out what you would like to go to your partner. However, they will probably lose out on inheritance tax which you don’t have to pay if you are married.
Most pension plans are catered towards married couples rather than partners living together. You are not entitled to receive a bereavement allowance or your partner’s state pension, if they pass away. Any payments become complicated when you aren’t married or in a civil partnership. It’s unlikely that they will pay out to cohabiting couples. You can declare your partner as the person to benefit from your pension plan, in the event of your death, but there is no real legal obligation surrounding this.
Article provided by Barlow Robbins, experts in Family Law
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic.
Published on 1st June 2015
(Last updated 28th March 2018)