How living with a partner could affect your financial assets

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    Though you might be aware of the potential effects a marriage, civil partnership, separation or divorce can have on your financial assets, it is also important to consider whether moving in with a partner could also have an impact.

    What assets could be affected by a change in relationship and living status?
    Assets that could be affected by a change in your relationship and living status include:

    • Money (including your bank account funds, savings, and debt owed)
    • Property
    • Pensions

    What is the legal definition of cohabitation?
    Though there is no legal definition for living with a partner, it usually refers to two individuals cohabiting without being married or being in a civil partnership. The term “common-law spouse”, referring to two people living together for a significant length of time, is common vernacular, but it does not have legal recognition.

    Who has the legal rights to assets when moving in with a partner? If you choose to take the next step and move in with your partner, assets are not considered joint unless both you and your partner have contributed to their purchase or maintenance; for example, a property, or funds in a joint bank account. There is no legal requirement between you to share pensions, property, or provide maintenance should separation or death occur. There is also no right to remain in the home you share, if a separation should occur.

    Money in joint bank accounts technically belongs to both of you; however, if your relationship ends and one person did not use the account for deposits or withdrawals during the relationship, it may be difficult to prove that they have legitimate stake on the contents. Debts are not considered joint unless it is in both of your names, or you are acting as a guarantor for your partner’s debt.

    Existing property is not considered joint, unless you both have contributed to the property’s purchase. Should a cohabiting partner pass away, the property does not automatically go to the surviving partner.

    Pension funds are not automatically awarded to the surviving partner if you or your partner should pass away. However, some pension schemes allow you to cover a partner, or to offer benefits to your partner.

    How can you protect assets in case of a later separation, if you are unmarried but live together?
    If you would like to protect you or your partner’s assets in case of a later agreed separation, you can create a cohabitation contract before you move in together. This is a formal document which outlines rights and responsibilities of each partner towards joint assets. It is not legally binding; however, should you wish to make a legally enforceable contract, you could consult a solicitor for further advice.

    Find out more about the legal impact of various relationship stages from the Citizens’ Advice Bureau

    How should you plan for a union of assets?
    If you are planning to unify assets with someone, it might be worth your while to research your options and talk to legal professionals.

    Though it is possible to handle all the necessary paperwork yourself when your relationship status changes, you may wish to consult a professional for assistance in understanding the legal aspects of any agreements.

    You could:

    • use an online advisory service
    • arrange for a few discussion sessions with a solicitor for legal clarification
    • use an independent third party between you and your partner to reach an agreement on assets
    • hire a solicitor to create a legally binding agreement and handle the entire process
    • speak to a pension or union representative about your partner’s potential rights to a pension

    Find out more about information on handling your financial assets here

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