More than 6.8m people in the UK now cohabit – the most since records beganCohabiting is now so common that just one in ten couples wait until marriage to move in together. But few realise just how precarious their future finances will be if they never tie the knot.
Lawyers warn the cracks are beginning to show as cohabiting couples face the reality of just how little protection they have. Almost half of people believe that cohabitees have the same legal rights as married couples if they separate, a survey by law firm Stowe Family Law has found. But that is a myth.
'For example, if people have lived together for just a couple of months, it seems incredibly extreme that they would have to split their finances equally.’ It is not yet clear how it plans to do this and experts warn that material changes would be difficult to implement in practice. She says: ‘It can be very messy where only one person is named as an owner because — unlike with married couples — their partner can be kicked out of their family home.
You will have more rights if you are listed as a joint owner of the home. If you are ‘joint tenants’, you have equal rights to the property, regardless of who paid more. And on the death of one of the partners, their share in the property will pass to the survivor.For example, if one partner provides 40 per cent of the house deposit and pays 40 per cent of the mortgage, their share will be 40 per cent of the house price, whether it goes up or down.
Many people wrongly think their loved ones will automatically inherit their assets when they die — but if a person dies intestate , they lose control over what happens to their estate. InheritancePartners who never marry are likely to face a 40 per cent tax shock, as they don’t benefit from the tax advantages of married couples.
This means that remaining unmarried can add tens — or even hundreds — of thousands of pounds to your partner’s tax bill upon your death. Cohabiting partners are not automatically entitled to any of their partner’s property, financial assets or belongings if they die intestate — unless they can be shown to be jointly owned.
That is unlike married couples, who can apply for a pension sharing order and are typically entitled to 50 per cent of their partner’s pension.
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