Cohabitation: protecting your assets

26/11/2019

Buying a house with your partner is an exciting time; it’s the start of your life together, but before you get swept away on a wave of domestic bliss, it’s important to make sure you protect yourself in case anything goes wrong. It’s an awful thing to have to think about and no one wants to believe it will happen to them but unfortunately, sometimes, it’s a fact of life.

Couples who cohabit are not covered by the laws affecting married partners and contrary to popular belief, you’re not automatically entitled to your partner’s estate if you separate or something happens to them – even if you have been living together for a long time. In this article, we’ve set out a few things you need to think about before you take the plunge.

Be practical
It may not be romantic but you need to think about your investment in the property. How are you going to fund your share of the purchase; are you putting in more than your partner; will the mortgage payments be equal? These things need to be seriously considered because if anything goes wrong in the relationship further down the line, you’ll wish you’d have had this clarified beforehand and, while you might feel awkward bringing it up, you’ll be thankful you took the time to protect your investment. Besides, the same principles will apply to your partner so it’s in their interests too.

Where’s the money coming from?
More and more people are obtaining their deposits for purchasing a home via inheritance. When money comes from this source there tends to be a bigger incentive to protect it. If your inheritance (or, indeed, your own money) is being used for the deposit or perhaps the greater share of the deposit, you need to ensure that it’s ring-fenced so it’s returned to you should the home have to be sold in the future. For this to happen, your contribution has to be legally documented before you complete on the purchase of the property. 

Get it in writing
Whether you’re buying somewhere together or your partner’s moving in with you, you should make sure you have a cohabitation agreement in place. This is a legal document which sets out the rights of each person and their interests in the property. If your circumstances are straight forward, rather than a cohabitation agreement, you may be able to protect yourself with a Declaration of Trust or a Declaration of No Interest. A solicitor can advise you which would be the most appropriate for your situation.

Make a Will
Unlike married couples, regardless of the length of the relationship, cohabitees have no claim over each other’s estate in the event of one of you dying. If you or your partner passes away without a will, your share of the property will pass to your next of kin in line with the laws of intestacy. This doesn’t include your partner. If you want your partner to inherit your shared home, you need to make a will; it’s that simple. If, however, you want your share of the property to pass to someone other than your partner if the relationship breaks down, you can include a clause in your cohabitation agreement that states your partner can’t make any claim on against your estate if you’ve separated prior to your death.

If you’re thinking about setting up home with your other half, it’s sensible to talk to a solicitor to find out how you can protect your assets. If you stay together you won’t need to rely on it, but if you do split up, a cohabitation agreement can save you a lot of time, money and stress.

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