Pension provider AJ Bell has urged couples to talk over their financial plans together as important legal changes could be on the way. The group said there is an important document worth thinking about getting in place.
The Government is looking at granting new rights to cohabiting couples – where a pair live together but are not married or in a civil partnership. The plans would include several stronger rights, such as allowing an individual to get part of a property sale after they have separated from their partner. As ministers look at the feedback from a consultation on the plans, experts spoke to the BBC's Money Box podcast about what actions cohabiting couples should take to stay on top of their finances.
Cohabitation agreements explained
Even before any new rights come in, one protection that you can put in place is a cohabitation agreement. Laura Suter, director of personal finance from AJ Bell, told the show how this agreement acts like a will, setting out what you want to happen with your finances should you separate or if one of you dies.
She said talking about your money may feel awkward if you've not broached the topic before – but this is well worth the time. Ms Suter said: "I think people just really need to think about having these open conversations and then think about things like pensions, think about who owns which assets and where they're going to go in the case of a split, think about any children and maintenance for them, what's going to happen to the main home. There's lots of different kind of elements to it that people need to consider."
Legal advice worth considering
If you are looking at arranging a cohabitation agreement, you can do it on your own or with some legal help – Ms Suter says the latter option may be the best one. She explained: "There's templates that you can fill in and do it without the legal advice. It's obviously cheaper.
However, it's much more likely to not be questioned in court and to be held up if you did separate or if one of you died if you've got that kind of legal advice. So it's definitely worth looking at the cost of that and seeing whether that's an option for you."
Joining her on the show was Hannah Saxe, a specialist family solicitor at Brabners law firm. She also encouraged people to get a cohabitation agreement. The lawyer said: "My key takeaway there really is to consider a cohabitation agreement.
As we've said, it doesn't sound very romantic and it might seem like a big undertaking, but at the end of the day, what it could potentially do is save you a lot of money on lawyers if there's going to be a dispute further down the line if you do split up, and a lot of stress. And it also gives you certainty about what's going to happen whilst you're in your relationship."
New rights could spark difficult conversations
The proposed new rights would apply to cohabitants who have lived together for at least three years or who share a child. Ms Suter said that if the new rules come into force it may spark some difficult conversations for couples.
She said: "I think what this proposal, if it comes through in its current format, will force a lot of couples to do is to really just open up that conversation. For some people that is going to be quite uncomfortable and they're not going to see eye to eye, but that's the case with lots of things in a relationship, and lots of people will have to navigate their way through that."
