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Girlfriend, boyfriend, life partner, companion, better half, common law spouse, house mate – there are so many possibilities and choices to identify the person you currently are in a relationship with or simply just live with (for the sake of brevity we will go with partner).

Each relationship will have its own characteristics, charm, challenges and possibly even frustrations. In a modern world the traditional nuclear family with a married couple with 2.4 children may seem much less common and may just not be what many people want or need.

The relationship or family dynamic will now often be a blend of what works for the parties and may comprise a mix of relationships and individuals (children, step-children, extended family, lodger etc.). You do not need to be in a romantic relationship with a person, or even co-habit with them, to be financially intertwined with them.

Despite all of this, laws covering the ownership of property, and particularly on what happens when we pass away, remains stubbornly rooted in historic practices. The spouse or civil partner is much better provided for and protected in law compared to the life partner (regardless of how long you may have lived together). This can cause significant problems when a non-married / non-civil partner couple will be financially intermingled.

If we stop and think about it; how often is it that the belongings of a couple and the financial contributions are not equal?

“You own the house, but I contribute to the mortgage and the bills.” “The house is in our joint names, but I put down the 80% deposit.”

It may work for now but is that the case should the worst happen or if third parties need to get involved?

And the door will naturally swing both ways. Would you be happy for your partner to take some of the assets and wealth that you have generated prior to you meeting them? Are you content for the current status quo to remain despite the fact that you may be heavily contributing financially toward another person’s assets or wealth?

Nobody likes to think about the worst-case scenarios of death or a break-up, but a lack of consideration of these possibilities can cause horrendous consequences at a time when we are likely to be at our most vulnerable.

Nobody wants to hear “ I am terribly sorry about your current situation; now let’s talk about the legal side of things!”

Unfortunately, regardless of informal agreements you think may be in force, without legal backing, you are likely to find yourself in extremely choppy waters should there be some difficulty in the future.

Under the Intestacy Rules (being the laws covering what happens to your belongings if you pass away without a valid Will) if you are not married or a civil partner to the deceased nor a blood relative you will not be a beneficiary to their estate. Could this mean that you will have to move out of the house that is owned by your partner (but where you’ve lived for the last few decades?). Will you be able to continue to survive financially without their support?

If you are not independently financially sound the only option would be to take legal action to sue the estate for suitable financial support. This could mean you may be essentially suing your children, step-children or other family members and naturally the affect on the family of such an action could be shattering.

This sounds like a worst-case scenario but it is in fact far too common an occurrence.

What about your informal co-habitation agreement? You have been contributing to the house’s running expense for years despite the fact that it is in your partner’s name. On the face of things, there is no issue with that as you both have an understanding as to what you ‘think’ the situation may be. But if there was a relationship breakdown how confident would you be that your agreement would be actioned as you think it should? Could there be a degree of selective amnesia between a hostile couple during a messy break up?

“I didn’t agree to that!”

“That isn’t what was agreed!”

“That isn’t what I meant, and you know it!”

Once again, on top of the stress of the relationship breakdown you may well need to take legal action to try and obtain what you feel is a fair outcome. Unfortunately, this may not be guaranteed and the often costly and time-consuming process may only result in further emotional and financial turbulence.

So what is the answer and when should you take action?

Consider what would be the case if you should break-up now or even should you pass away. Would the resulting distribution of your belongings be what you want and also what your partner would need? If you are certain the answer is yes, then you are likely to be in the minority (or are well prepared!).

Have you made or updated your Will following any significant life changing events such as moving in with somebody or becoming very financially intertwined?

Have you considered a Co-habitation Agreement or a Declaration of Trust confirming any financial agreement between you? Despite the fact that a house may not be in your name you may well be entitled to a share of the capital due to your contribution in money or due to your behaviour.

The simple answer is to take action and legally record your intentions.

Your Will would cover what should happen if you pass away. During the process of drafting you should be thinking of the various scenarios that could happen and you can give instructions as to what happens in each case. You make the choices as to what happens with your assets. It wouldn’t be down to a best guess by the prevailing stop-gap law at the time.

Your co-habitation agreement could confirm what the results are of any financial agreement between the parties. It will be clear and unambiguous and both of you will need to sign it to confirm that you understand it and it is what you want.

Your Declaration of Trust will confirm the breakdown of ownership of any property or home you may be contributing to. If you are paying towards a mortgage, why shouldn’t you get an interest in the property? If you want to safeguard the deposit that you took years to save up, make sure the terms are clear so that if the worse should happen, you will get that back.

None of these steps sound fun or romantic, but often during the rose-tinted period of a relationship very little consideration is had to the consequences of any interaction. This is particularly the case when it comes to financial contribution and co-habitation.

The benefit of giving this consideration sooner rather than later is the peace of mind that your intentions and the understanding of any agreement are clearly recorded. This should mean you avoid the vast majority of stormy waters should the worst case scenarios arrive.

With both Partners now happy and safeguarded you can happily sail off into the sunset on your adventures together.

For more information about this please contact Gwyn Pritchard, partner, at [email protected]