How to protect yourself financially in case you and your partner split up
Couples who live together have hardly any rights compared with married couples or civil partners, and most only discover this when their relationship has broken down or their partner has died.
But there are things you can do to protect yourself, provided you are sensible about recognising that you might one day split up, however romantic your relationship is now.
1. Buying a home
Get advice from a solicitor – how you establish ownership of your home can make a big difference to your rights if you split up.
If you own your home as joint tenants, you own it jointly and equally. If you split up and sell it, you will normally get half, no matter how much you contributed to it. If one of you dies, the other will automatically inherit the other half.
If you buy your home as tenants in common, you can own uneven shares in the property, so one partner could own 40% and the other 60%. If one of you dies, that person’s share will go to the beneficiary named in the will.
But even if the property is owned in one person’s name, it is still possible for the other partner to prove they are entitled to a share if they split up. To prevent unpleasant surprises, draw up a living together agreement on moving in that sets out what you have agreed about the home. If you do not intend the non-owner to get a share, spell this out very clearly, or if you do intend to share the home, spell out the shares very clearly.
In all cases, if there are children a court can order the transfer of the home to the parent who is mainly looking after them under the Children Act 1989 to ensure the children are housed. If part or all of the home is still owned by the other partner, however, it will revert to that partner when the youngest child reaches the age of 18.
2. Renting a home
Consider putting both names on the tenancy. If only one is named, that person can evict the other if the couple split up, although reasonable notice should be given. If the named person decides to leave, the remaining partner can ask the landlord to put his or her name on the tenancy, but he doesn’t have to unless ordered by court because you are vulnerable or have children.
3. Draw up a living together agreement
This is the cohabiter’s equivalent of a pre-nup, forming a record of what each party is contributing to the household. The Advice Now website points out that it can help you sort out the day-to-day workings of living together, as well as enabling you to split up with a minimum of squabbling.
Like pre-nups, a court can decide to ignore the agreement, but it will generally uphold it if what you agreed still produces a fair outcome for both of you, neither party was under pressure from the other and you were both honest about your finances when drawing it up.
However, James Thornton, partner with Stowe Family Law in Harrogate, says if you have it drawn up by a solicitor as a formal legal deed and independently witnessed, it will be legally binding just like any other legal contract.
4. Make a will
This is imperative if you want your partner to benefit from any of your assets or even to be able to stay in your home. However long you live together, all your property and assets will go to your blood relations rather than your partner if you die.
If you are the father of children born before 1 December 2003 and you have not married their mother, you do not automatically have parental responsibility for them. This means you do not have the right to be consulted for big decisions concerning their lives, such as caring for them if the mother dies or making decisions about medical treatment. Fathers in this position can either make an agreement with the mother or apply to court for an order if she refuses to agree. Fathers who are named on the birth certificates of children born after that date will automatically have parental responsibility.
6. Beware of relying on your partner’s savings for your retirement
You will have no right to these if you split up, and if your partner dies, some pension schemes do not pay survivor’s benefits to unmarried partners. Nick Bamford, of independent financial adviser Informed Choice, suggests cohabitants try to build up separate pensions: even those who are not earning can save up to £2,880 a year into a personal pension, and this will benefit from a further £720 in tax relief.
7. Ongoing financial support
If the couple have had children, the parent looking after them, typically the mother, can apply for child maintenance through the Child Support Agency providing she can prove paternity, says Thornton. However, as a cohabiter she is not usually entitled to financial support herself.
8. Visit the Living Together section of Advice Now
This contains information on all aspects of how to establish a safe and secure cohabiting relationship, and a template for a living together agreement.