Not married? Know your money rights

justin schamotta
By Justin Schamotta

couple money management©iStock.com/RichLegg

Couples living together without being married or in a civil partnership are Britain's fastest-growing type of family.

There were 1.45 million such cohabiting couples in 1996. By 2016 this number had more than doubled to 3.3 million, according to figures from the Office for National Statistics.

In some ways, however, rules about money and property are still oriented towards married couples.

In this guide we take a look at the rights unmarried couples have when it comes to:

Money rights

Combining your day to day money can be useful, but it's worth knowing your rights.

Banking

As might be expected, non-married couples who keep separate bank accounts have no right to access the money in the other's account.

Things become murkier with shared accounts.

Usually if a relationship ends any funds in joint accounts are shared between both partners, irrespective of whether only one partner was paying into it. Yet if one partner never used the account at all, to either pay in or withdraw, they may have trouble claiming any rights to it.

If one partner dies and the account is in joint names, the other partner can continue to use the money in the shared account, though some of the balance is likely to be claimed as part of the deceased partner's estate.

Debt

Each partner is only liable for debts that are in their own name.

If the debt is in both names, however, both partners will be fully liable for the whole amount.

So, for example, if a couple took out a joint loan and one partner stopped making payments the other partner would have to repay the whole loan alone.

The rules are slightly different for credit cards with additional holders, see this guide.

Couples that aren't married or in a civil partnership can still be financially linked if they share certain assets which means that one partner's bad credit can affect the other partner. Find more on that here.

Also when someone acts as a guarantor to their partner, for anything from a personal loan to a rental agreement, they will be liable for any debts run up by their partner. For more on this visit our guide for guarantors here.

Passing on a pension

Pensions were designed to provide for the wife if the husband died.

These days, the details of who the pension provider should pay out to should the policyholder die differ widely.

"Each scheme sets its own rules," says Claire Walsh of independent advisers Pavilion Financial Services.

"Some state this pension will only be paid to a legally married spouse. Others leave it to the discretion of the trustees, some stipulate that it can only be paid to someone who is financially dependent, whereas others will allow people to nominate a non-married spouse."

The take home is that couples who aren't married and don't plan to marry should stipulate who their pension should be paid out to in the event of their death.

In the case of a pension scheme with provisions for couples that are living together, this can be done through an "expression of wishes form", which states whom the recipient wants the pension to be paid to if they die.

And if a scheme isn't suitable to cohabiting couples, the person wishing to access their partner's pension benefits may be able to do so using the help of a trustee of the scheme or a union representative.

The property question

Owning or renting, property can be a thorny issue for couples.

When your home is owned

There are two situations that typically cause problems for unmarried couples that own their home.

The first problem arises where partner A moves into a property already owned by partner B, whose name is on the deeds.

Partner A may contribute to the mortgage and live in the property for years on end.

However, if the relationship breaks up, partner A usually has no legal right to a share in the property (except in certain cases, see next section).

The second situation is where a couple have bought their home together.

If they subsequently separate, the property will be automatically divided 50:50, regardless of how much each partner contributed.

Proving a contribution

In the first case, where only one partner owns the property, the non-owning partner may be able to obtain the right to live in the home, prevent their partner from living in the home or secure part of the proceeds when it's sold, as long as they can demonstrate that they've contributed to it.

For example, if the non-owning partner made all or some of the payments on the mortgage, put up some money for the deposit or paid for an extension to be built.

Couples with children

In the case of children, if a couple separates one partner can ask a court to transfer the property into their name, whether the property is jointly owned by both or solely owned by the other partner.

This is only granted if the court feels it is in the best interests of the children and it is usually only done for a limited period of time, for instance until the youngest child is 18.

Cohabitation agreements

In both cases, these problems can be prevented from arising by putting arrangements in writing, as unromantic as it may sound.

By making it clear what the objective for ownership is from the outset, couples can avoid unnecessary extra heartache should they subsequently separate.

'No nups', cohabitation agreements or, officially, declarations of trust, can cover anything from who put how much money into a property to supporting children.

Where one partner owns it could also include a clause the non owning partners right to remain there if the relationship breaks down or the owning partner dies.

Once everything has been assigned to each partner's agreement, the couple can approach a lawyer to get the agreement properly drawn up, signed and witnessed.

If both partners each get their own legal advice on the agreement it prevents either one later claiming that they didn't agree to sign.

Rights when renting

Renters face similar problems to property owners.

If only one partner is named on the tenancy agreement the other partner has no right to stay if the relationship goes belly up, even if they've been contributing to rent.

With a joint tenancy agreement both parties have rights and most landlords will have no problem adding an extra name. In fact, most housing associations demand that partners planning to live together take on a tenancy as joint tenants.

If one partner in a joint tenancy decides to leave, they may be able to assign the tenancy to the partner that is staying.

Most council and housing association agreements will have a clause on the right to assign in the tenancy agreement. Private tenants have far fewer rights and are really at the mercy of the landlord.

For more on assigning tenancy see this really useful Shelter guide.

Tax breaks: worth getting hitched for?

David Cameron's tax breaks for married couples amount to a measly £212 for those paying the basic rate of tax. Unsurprisingly they haven't inspired many couples to tie the knot.

Only 33,000 couples have successfully applied for these tax breaks since they came into force in April 2016, and they've recently been described as an 'utter flop' by shadow ministers.

Nevertheless, tax is worth briefly considering, particularly inheritance tax.

While it's true that married couples can pass their assets on to the surviving member should one of them die, inheritance tax only kicks in if the estate is worth more than £325,000.

Unless they've finished paying their mortgage, most couples that aren't married or in a civil partnership are unlikely to have assets worth more than £325,000 to worry about.

Contrary to popular belief, 'common law' marriage isn't real.

Common law marriage

Unmarried couples often believe that some sort of 'good enough' law exists to protect their rights should the relationship fall apart.

While cohabiting couples do have some limited rights, common law marriage is a myth.

Irwin Mitchell recently carried out a nationwide survey revealing that three quarters of barristers and solicitors agree that laws on cohabitation should be introduced to reflect the numbers of cohabiting couples in the UK.

Firms were seeing growing number of couples expecting legal rights, researchers said.

While it seems almost inevitable that legislation will eventually change to reflect the UK's new familial landscape, even the most secure unmarried couples would be wise to consider how best to protect one another should the unthinkable happen.


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