Your relationship is your own, and it isn’t for me to say what it should or shouldn’t look like. As long as you are happy and healthy, love is love. But when you make decisions as a couple, there can be lasting financial impacts that most people simply aren’t aware of – and that’s what I want to flag in this post.
Living together, for example. This is a big and exciting step, and unmarried couples living together are the fastest growing family “type” in the UK. I am personally part of that statistic. But many people are unaware that in fact, co-habiting does not carry the same legal rights as marriage in this country.
Because of this, if you are home owners, look into how you own your property – if it’s in only one name, consider whether you are comfortable putting it in both names. If it is held in both names, discuss whether the way you hold it in law (joint tenants or tenants in common) is how you would want it to be managed if something happened to one of you. Or, make sure you both have wills conferring the right to live there, or the right to inherit, if something happened to your partner.
Having a will is really important either way. Most people assume that if you die without one (known as dying intestate), your money and belongings will automatically pass to your partner. This is not the case.
A surviving partner who wasn't married or in a civil partnership with the deceased has no automatic right to inherit. Instead, depending on whether they survive you, your wealth would pass to your children, or parents, or siblings, or more distant relatives, or even ultimately, the Crown!
For married couples where one person dies without a will there is a legal entitlement, but where there are children this is capped (currently at £270,000), and anything above that is ultimately shared with the children.
Another thing to keep in mind is your pensions. Pensions are not something for old people! If you don’t save for a pension when you’re young, you won’t have one to live off when you’re older. I can’t bang on about this enough – pensions are crucial to your long-term financial security, independence, and resilience.
It isn’t the most glamorous chat for date night, but make sure you both understand what you are entitled to under each other’s pension or life insurance arrangements if anything happens.
And for those approaching retirement, be part of your partner’s pension planning. The likelihood is that he will have more pension provision than you (the average 65 year old woman’s pension pot is just 1/5th of men’s, and women’s state pension works out as almost £30,000 less than men’s over 20 years), but that you will outlive him, so his savings are an important part of your joint future!
For example, if he chooses to take a guaranteed income payment (known as an annuity) with his pension sum, he might think nothing of choosing a Single Life policy, but that means the payments will stop when he dies. A Joint Life Annuity can transfer to you on his death so you are still provided for.
But it’s not just about what happens if someone dies. Hopefully, there is a whole load of life to be lived before any of that needs to be dealt with.
In most relationships, there is one partner (and in heterosexual relationships, it is often the man) who takes the lead on the finances. Think about your car insurance. Maybe your other half has handled it, no doubt you are adequately insured. But does your policy record both of your no claims histories? Or are you simply an additional driver on the policy in his name?
It might seem unimportant, but if for any reason down the line you want your own policy, you could see your costs rise significantly simply because you don’t have a no claims bonus in your own name. So always look into the detail of policies, to make sure you aren’t just insured at the present time, but protected against this kind of avoidable disadvantage in the future if your circumstances change.
Important disclaimers – This is not advice! The right course is unique to you, and I don’t know anything about your circumstances. I am just signposting what I have learned so you can make more informed decisions. I live in the UK so this is all based on UK law and financial markets, but there may well be relevant pointers to take away and explore wherever you are in the world.