Protect your cash in case your relationship ends
Robin King looks at how couples who live together can make sure they don't lose out financially if they are unlucky in love.
Moving in together is an exciting time for any couple, with plans of grand interior designs, combining possessions and in many cases the chance to cut down on the cost of bills.
However, it is important to take a moment to ensure that you are fully financially protected, should things go wrong.
Breaking up can be extremely stressful at the best of times, and can be made even worse if you live with your partner and own a property together. What can you do to ensure that you’re financially protected when buying a property with your partner and making one of the biggest financial commitments that you will ever have to make?
Tenancy in Common Agreement
Setting up a Tenancy In Common Agreement is a good starting point. This allows you to declare the shares that you hold in your home, typically the percentage of the cash that you have invested in the property. It is a good way for couples who have put unequal deposits into a property to protect their shares which can then be separately sold, mortgaged or bequeathed. Should love turn sour, you would be able to sell your shares, buy out your partner’s share or sell the property together with your former partner and receive a sum proportioned to your original investment.
When you’re buying a property, your solicitor should be able to advise you on the possibility of a Tenancy In Common Agreement and can help you and your partner draw up a Declaration of Trust that details the shares that you own. This is a legally-binding written agreement which records the financial agreement between all of the owners and protects any financial contribution that you have made to the home purchase. It also sets out what will happen if the property is sold and how joint owners can buy each other out.
Writing a will
Many people also forget how important it is to make a will. Should the worst happen, if you and your partner are unmarried, without a will your assets will be passed to your next of kin which will not necessarily be your partner.
Therefore it is essential to have a will in place to ensure that you and your partner will be financially protected. If you are both tenants in common, this is especially important as it establishes what will happen with your share of the property, as your partner will not automatically inherit it.
Organising mortgage life insurance to the value of your outstanding home loan means that your loved ones will continue to have a home if the worst happens.
For a guide on this important cover check out Why life insurance is more puzzling than Einstein.
Who gets what?
Buying a new house often comes hand in hand with buying new furniture and gadgets, such as TVs and fridges.
If you are buying them jointly with your partner, it may be worth making a list of the purchases and deciding who will get to keep them in case of a break-up, although for some this will be very unromantic and a step too far.
Moving in with your partner is a very exciting time but you must not forget that purchasing a house is one of the biggest financial commitments you will ever make. Making the necessary arrangements when buying your home as a couple will protect you in case things don’t go as planned.
Being sensible and organised will only be a comfort to you and prevent further distress if you ever find yourself in a reversal of love fortune.