Changing Circumstances

The importance of keeping your finances in step with your changing circumstances

The concept of modern families and households has changed. Co-habiting couples have been the fastest growing UK family type in the last twenty years. The numbers have more than doubled,  from 1.5 million families in 1996 to 3.3 million in 2016.*

Unfortunately, the law hasn’t kept pace with this shift in statistics.  Cohabiting couples have fewer legal rights financially than married ones. The legal system treats unmarried couples as two separate individuals regardless of how long they’ve been together or how many children they may have. The myth of becoming a “common law wife” or “common law husband” after two years is only that – a myth.

Protection for your loved ones, whatever happens

Divorces happen, couples break up, people move on, make new lives for themselves and form new relationships and new families. If you are cohabiting and not planning on marrying or forming a civil partnership, there are a few sensible financial precautions that you must take to make sure your partner and family are protected. It makes sense to take the correct steps now, rather than live to regret it later.

  1. You have created a home together; your family should have the legal right to stay on when you’re gone. Review the ownership of any property (especially the one you both live in) so that, should you die, the remaining partner can keep on living there. This can either be as joint tenants or tenants in common. Under joint tenancy both partners own the whole property. As tenants in common each of you can leave his or her share of the property to the other partner, or nominated person in your will. There is no Inheritance Tax exemption between cohabiting partners so you will also need to factor this into your decisions.
  2. Update the person nominated as the beneficiary of any pension plans or life insurance policies. Under current law unmarried couples cannot claim pension or bereavement benefits for deceased partners.
  3. The same goes for any savings or investments held in just one partner’s name. Should you die, or split up, any money invested or any other assets in one partner’s name will stay in that person’s name: the other partner will have no legal claim to the money, unless there is a clear legal agreement in place stating otherwise.

Unmarried couples have very few automatic legal rights to each other’s assets. Therefore it is vital that you put the proper legal structures in place to secure the future for yourself, your partner and your family. Especially important is that consideration is given to any potential inheritance tax issues as, unlike married couples, co-habiting couples are not exempt from this tax.

Please contact me to arrange a mutually convenient appointment to review your insurance and protection requirements. An initial meeting is free of charge and without obligation.

*Source: ONS Statistical Bulletin “Families and households in the UK: 2016