Whether it’s young couples moving into a first home together or older pairs blending families after a divorce or bereavement, many people
co-habit at various stages in their lives. But some who have lived together for years, or even decades, might be surprised to learn
they don’t have the same legal rights as a married couple or civil partners. There are many financial decisions for co-habiting couples …
Take property for example. If your name does not appear on the deeds, you are not automatically entitled to any share of the property, regardless of how long you have lived in it or how much you have contributed to a mortgage.
That’s why it’s important to think about tenancy types when buying a property with someone else. You can choose to be joint tenants, where the property is owned equally, or tenants in common, where each person owns a specific part of the property. As a joint tenant, you are entitled to half of sale proceeds if you decide to sell the house. Crucially, your partner would also automatically inherit your share of the home if you were to die – and vice versa. As a tenant in common, you only own your proportion of the property and therefore the deceased
tenant’s part would not be passed on to you unless, for example, they had bequeathed it to you in a Will.
Another consideration is life insurance. Unlike married couples who receive a bereavement support payment if their spouse dies before State Pension age, those co-habiting are not eligible for financial assistance. Therefore, if your partner might struggle financially were you to die, life insurance could help provide for their needs and thus bring peace of mind once in place.
Steps to take
If you haven’t already, you should also think about drawing up a Will. Another important document to consider is a living together agreement, which can be used to set out how your possessions or assets might be split if your relationship were to end.
Talk to us
We can help you understand the law around co-habitation so that you can protect yourself, your children, and your partner so you make the right financial decisions for co-habiting couples.
Source: Essentially Mortgages Q1 2022