The financial risks of moving in together
It is easy for couples in the early stages of a heady romance to move in together and give little or no thought to the financial implications of separation.
For some the idea of separation will never enter into their thoughts. Others may be concerned that over a period of time their partners may develop rights over their property as a “common law” husband or wife.
Legally the concept of a common law husband or wife does not exist and the rights of cohabiting couples vary significantly to those of married couples.
These days the majority of couples now deciding to live together and pool their finances prefer for a number of reasons not to marry, and little appreciation is given to the practical effects of this.
Having entered into such an agreement, a client commented:
James Belderbos was excellent and whilst I was reluctant at first to disclose some personal financial information to my boyfriend, James explained to me the pitfalls of my reluctance and made me understand the benefits this would provide in the long run.
I would strongly encourage everyone to enter into a cohabitation agreement on moving in together. The price of this agreement is nothing compared to what you can lose if things go bad.
For many couples, one may be significantly wealthier than the other. This is especially the case where one may own the property in which they live or contributed most to the purchase price. The non owner, can over a period of time, whilst not legally owning the property, acquire a beneficial interest in it such that on separation the legal owner of the property may face having to sell their home to pay off the non owners interest.
The consequences of this can be felt by parents who may have contributed substantially to a deposit or gifted a property to their children. They may be particularly disappointed to find out that their hard earned capital, or what they considered to be their children’s inheritance has effectively been lost by a failure to consider the implications of separation.
Fortunately, whilst Parliament has not regularised the law in relation to cohabiting couples, there are ways in which you can help to protect your interest in your property which may prevent you losing your home.
A cohabitation agreement or living together agreement is a useful way of protecting your interests; whilst there is a cost involved it is considerably less than potential costs of a dispute or losing your home.