Come Live with Me and Be my Love ....
Five practical tips for living together securely
“Come live with me and be my love” said the passionate shepherd to his beloved, according to Christopher Marlowe.
But, the story of Joy Williams, which we covered recently on this blog, highlights one of the many ways in which unmarried couples who live together are vulnerable.
Choosing to stay unmarried means that you lack many of the automatic protections that married couples have in the event of their splitting up or one of them dying.
But that doesn’t mean you have to take a trip down the aisle if marriage just isn’t for you. It simply means you must have an adult conversation with your beloved and agree on some practical steps to future-proof your finances, your relationship and your family.
Here are five suggestions to consider if you’re an unmarried couple and you want to make sure your assets are protected and your wishes are respected: -
1. Draw up your wills
Unmarried couples don’t automatically inherit from each other when one of them dies. This can cause distressing unintended consequences and real economic hardship for the partner you leave behind if you die without a will.
If you are unmarried and have children, it’s your children, not your partner, who will automatically inherit everything in the event of your death without a will. In the absence of a will, your children’s automatic rights could place your partner at risk of homelessness and poverty.
If you don’t have children, your partner is in no better position. You may have assets in your sole name which you intend to benefit both of you. But in the absence of a will, in the event of your death, those assets will bypass your partner altogether, and will automatically go to your parents, or your brothers and sisters, or more distant relations. Your partner won’t feature in the line of succession at all.
Like Joy Williams, your partner will be forced to go to court to apply for “reasonable financial provision” from your estate. Joy Williams’s court battle for reasonable financial provision took four gruelling years and cost £100,000.
To avoid this kind of catastrophe befalling your partner, and your family as a whole, it’s a good idea to have your wills professionally drawn up. With intelligent advice, you can construct a will that spells out exactly how you want your partner – and your family as whole – to be provided for in the event of your death.
You don’t even have to make a one-off division of your assets between, say, your partner and your children. There are very effective ways to set up your will so as to benefit successive generations of your family fairly and equitably.
2. Consider drawing up a living together agreement
Also known as a cohabitation agreement, this is a contract which clearly states: -
- what assets each of you has brought to the relationship,
- who has what financial responsibilities, and
- what will happen to your assets if you ever split up.
The contract covers every aspect of your joint finances, including your house and its contents, your savings and investments, how much you each contributed towards the deposit for your house, and even how much each of you chips in towards the monthly bills.
Married couples’ finances are protected by a self-contained code of legal rights if they split up. Divorce law is designed to meet a parting couple’s financial needs as fairly as possible with the resources available. But unmarried couples who split up have no such straightforward rules to call upon. So, going to court to settle financial differences is much harder and often far more expensive for an unmarried couple than a married couple.
As you start your life together in a spirit of trust and optimism, it might feel uncomfortable to draw up a contract that seems to assume you will one day split up.
But, at heart, a living together agreement isn’t about splitting up at all. It’s about laying clear and practical financial ground rules for a fair and happy life together.
One of the most frequent causes of rows between couples is disagreement over money. If you deal with this openly and positively from the outset, agree the ground rules and have them in writing, you dramatically reduce the scope for misunderstanding and conflict, and vastly improve your prospect of going the distance.
3. Decide how to own your home together
When you co-own a house, there are two distinct types of ownership, and it pays to think about, and decide, which works best for you.
Joint ownership – ownership as “joint tenants” – means that you both own the whole of your house. So, if one of you dies, the other will become the sole owner of the house. This is the “right of survivorship” and it trumps all the other inheritance rules, whether there is a will or not.
This is absolutely fine if your only priority is providing a home for your partner after you’re gone. But what if you have kids? Particularly kids from a previously relationship?
As joint owners, if you die first, even if you have written a will saying something different, it’s your partner who will become the sole owner of your house. What happened to Ebenezer Aregbesola’s daughter illustrates this very starkly. Ebenezer left his half of his house to his daughter, but because he was a “joint tenant”, his daughter didn’t get her intended inheritance.
The alternative is to own your home as “tenants in common”. This kind of co-ownership means you each have separate and distinct shares in the property, a bit like shares in a company, which you can bequeath as you see fit in a will, or which will automatically pass according to intestacy rules if you haven’t made a will.
So, when you’re buying a house together, think about the type of co-ownership that would suit your situation best.
But if you’ve already bought a place together, it’s not too late to make an adjustment. You can easily convert to ownership in common. It’s just a question of having a declaration drawn up and registering it at the Land Registry.
4. Plan ahead regarding your pension.
Some private pensions, particularly work-related ones, don't automatically pay out to unmarried partners on death. It is worth checking whether this is the case with your pension.
To make sure your partner receives your pension benefits in the event of your death, you can complete a form nominating them as the recipient.
Talk to your financial advisor, or, if it's a work-related pension, to your HR department, to make sure the right arrangements are in place.
5. Consider life insurance
Life insurance has never been cheaper than it is at present. The premiums you pay each month, as compared to the benefits you receive, have never been lower. This is a great opportunity that you can capitalise on, to provide security for your partner, your children, or both.
For example, you may prefer to structure things so that your children inherit all your assets at the time of your death. Taking out life insurance, that pays out a lump sum to your other half at the time of your death, may be a good way to redress the balance for your partner, because you’d be paying a relatively modest sum each month to ensure that your partner is secure. You might, for example, take out insurance that gives your partner the funds to buy out the share your children inherit in your home.
Alternatively, you may feel that leaving everything to your partner is the right way forward, but you may still want your children to have financial security after you’re gone. Taking out as much life insurance as you can comfortably afford may be the right way for you to provide that security for your kids.
If you go down this road, though, the important thing to remember is that you must fill out a form nominating who will receive the proceeds of the policy on your death. If you don’t do this, the policy proceeds will form part of your estate, and won’t pass as you intend.
Above all …. live, love and be happy!
It goes without saying that living together requires us to be mature, loving and mutually respectful. Loving each other enough to move in together goes hand in hand with respecting each other enough to discuss these issues openly, negotiate solutions that work for you both and take an agreed course of action.
Your relationship is precious and deserves strong foundations. And we can help you lay those foundations – just give us a call on 0151 601 5399 or fill in the contact form below, to find out more.
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"As an engaged couple with a portfolio of rental properties, we wanted to make sure that we were both well provided for if anything ever happened to one of us, and we were also worried about Inheritance Tax. Our financial advisor recommended that we seek advice from Will Written. Gina was very organised and reassuring. She explained everything to us very clearly. We know where we stand and we found out a lot that we didn't know before. Having made our wills, we feel we have nothing to worry about, we are happy that we have been sensible and haven't put off making our wills unnecessarily. "
Denise R & David D