Steps Cohabiting Couples Can Take To Protect Their Finances

With sharp increases in the number of divorces, couples are increasingly choosing to not marry. In fact, recent statistics suggest that there are now over six million cohabiting couples in the UK – twice the amount 20 years ago. An issue with this however, is that the legal rights provided for married and cohabiting couples are currently unequal. As a result, the latter are at a substantial disadvantage in relation to financial arrangements, should they decide to separate in the future. If you are cohabiting without the intention to enter into a marriage or civil partnership, this guide will be useful in detailing the steps you can take to help arrange your financial affairs.

The first essential step for cohabiting couples is to draw up a valid Will setting out how you want your estate to be distributed once you are no longer around. Recent changes to the rules on intestacy came into force last year providing additional rights to unmarried couples. Nevertheless, cohabitees still do not automatically have the right to their deceased partner’s estate and, in order to have that peace of mind, a valid will is the primary method to guarantee your arrangements.

It is also worth discussing with your partner how you both want to hold the legal interest of the property. When purchasing a home together, you can choose to hold the legal interest as joint tenants or as tenants in common. This distinction is significant. How the legal interest is held plays a vital role in what happens should a partner die. Under joint tenancy, both own the whole property which, on a partner’s death, passes completely to the sole surviving tenant. Under tenancy in common however, each partner owns a specified share which can be left to anyone they wish. It is important therefore that this issue is discussed in detail by both partners so that they are clear about how the property will be distributed.

Another useful tool in arranging your financial affairs is to set up a cohabitation agreement. This sets out in detail the assets each partner is bringing to the relationship, and how these should be divided up in the event of separation. Such a document is particularly beneficial where the property is owned by one partner but where the other has helped pay the mortgage. Should these contributions not be written down in an agreement, the partner who does not own the property could find that they have no right to a share in the home should the relationship break down in the future.

At Seatons, our team of highly trained legal professionals have a wealth of experience in relationship disputes and provide clear, easy to understand legal advice at low sensible fees. Should you have any questions regarding the writing of a Will, a cohabitation agreement, or just require additional information on the legal rights of cohabitees, feel free to give us a call on 01536 276300.