Moving in with a partner is an exciting time. Many choose to do so without getting married these days. In fact, cohabitation is the fastest growing family type, according to official statistics. But before you get carried away with redecorating and setting dates for dinner parties, it’s important to outline the financial side of things.
Many save those conversations for after they’ve moved in together. But it’s better to be honest about your current financial situation before you move in. Once the boxes are unpacked, it’s a little late. Here are five things to do before you make the move:
Speak openly about money
Couples of all ages are notoriously poor about discussing their finances. In later life finances become more involved as most have accrued assets – property, stock market investments, pensions and savings. Many will have also racked up debts. If you do have debts, make sure you’re honest about them from the outset. These things will come out eventually anyway.
If you’re in this relationship for the long term you need to start thinking like a couple, financially. It can be tricky of one has invested wisely and saved all their life, and the other doesn’t have two pennies to rub together. But as long as you’re both honest and open about money, it should be something you can work through.
Your finances in a new relationship
Discuss how to split your household expenses based on who receives more or less from their pension or salary. One person could cover the big outgoings like rent or the mortgage, while the other covers household bills and grocery shopping. Alternatively you could simply pay different portions of the overall cost. It will help to make estimates of what the bills are expected to reach each month and go from there.
Factor in rent or mortgage, council tax, gas and electricity, water, TV licence, home insurance, TV subscription, broadband and phone line rental. Remember to allow extra for council tax as your single person’s discount will be lost.
Organise bank accounts
The easiest way to pay bills is to set up an automatic payment to a joint account once a month. You don’t have to give up your own bank account. Just add a joint account that you both have access to. Put in enough cash to cover your end of the deal and perhaps a little extra as a slush fund to account for irregular expenses.
It’s better to contribute more than you expect to pay originally so there’s no nasty surprises – like if the boiler packs up. If the idea of any joint account is too much to handle, one of you will have to take the lead and the other pay into that account.
It’s not very romantic, but it’s prudent to have a contingency plan should things not work out between you. There is no such thing as a common-law husband or wife so you need to think about what would happen to assets if you did split up.
If you break up, an agreement should clearly outline what rights each has. Cohabitation agreements can act as an insurance policy and cover everything from property ownership to who owns the sofa. Speak to a solicitor who can draw one up.
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Update your will
Equally it’s important to make sure your will is updated. If you don’t have one, now is the time to get on with it. Without a will, your estate is governed by the rules of intestacy which can be very prescriptive, causing significant settlement delays and may lead to your assets and belongings being allocated to someone you may not wish to leave them to.
Cohabiting couples don’t currently benefit from the intestate rules as the law doesn’t recognise cohabitation in the same way it does marriage and assets don’t automatically pass between couples. For this to happen, both partners would need to make a will, naming each other as a beneficiary.