The sad fact is that there may be no legal protection for you, if you split up with your cohabitation partner. With more than 6 million cohabiting couples in the UK, this leaves a lot of people legally vulnerable. Unfortunately, it doesn’t matter if you’ve been with your partner 1 month or 80 years, if you haven’t married or joined in a civil partnership, there are certain benefits that you won’t get to enjoy. It’s best to know exactly where you stand on this matter, rather than find yourself drastically out of pocket later on down the line, so let’s take a look at where you should start, to ensure your financial safety…
Wills
The number one consideration on your list should be a will. Don’t assume that your partner’s estate will automatically fall to you, unless you are married or in a civil partnership. Make sure that it’s clearly set down in a will how much you will receive from your partner, should they pass away. Don’t put it off! DIY your own will online, or contact a solicitor. It’s a relatively small cost, when you consider what could be lost. It’s never too early to write your will, once you enter adulthood, but especially if you are cohabiting.
Cohabitation Agreements
If you’re concerned that there could be personal conflicts over finances, be sure to write up who will receive what, should you split up. This is especially important if one of you has bought the house, but the other has been contributing to the mortgage. You could easily lose all of your investment, if you aren’t clear about what each of you is eligible for, should the relationship break down.
In a cohabitation agreement, you can also set out who is responsible for paying what, while you are living together, or how you plan to support your children, should the relationship deteriorate. Be careful of joint bank accounts and set out clearly how these will be dealt with equitably. Although you may feel smitten now, you never know what will arise in the future, and it’s nice for both parties to have some security.
Choosing Your Home Agreement
When you buy a house together, it’s important to choose the terms surrounding this carefully. You can decide to sign for a new home as joint tenants or tenants in common. If you pick a joint tenancy, you will both own the house (which might solve some of your problems, but you may decide this is unfair, if one of you is paying for the whole property). If you choose to be tenants in common, you will both own a share, but your share will pass to your next of kin, if you pass away (rather than your partner; unless specified otherwise in your will).
Look To Your Taxes
Married couples enjoy tax advantages that you just won’t be eligible for if you’re cohabiting. Not only do married couples receive general tax breaks, but they are also specifically exempt from inheritance tax – the estate is passed completely intact to the other partner. If you are not married, or in a civil partnership, it’s likely that you will be taxed for what you inherit off your partner.
Your Pension Plan
Most schemes are equipped only for married couples or civil partnerships. You may not be able to receive a bereavement allowance or the state pension, if your partner has passed away. You can name your partner as the person who should benefit from your pension scheme, upon your death, but this actually isn’t legally binding at all. Unfortunately, the law isn’t kind to couples who aren’t married!
