How to financially protect yourself when Covid cancels your wedding04 November 2020
The past few months has seen upheaval in every aspect of our lives, and aside from the fears over job security, disappointment over cancelled holidays and the stresses of home schooling, there will be many, many couples who have had to cancel their wedding. While some may have been able to take advantage of loosened restrictions in recent weeks and had a small ceremony, from Thursday, all marriages in England are to be cancelled under the new lockdown. This is obviously extremely disappointing, but could also have a wider financial impact on co-habiting couples. Gary Smith, chartered financial planner at Tilney, explains how you can protect yourself.
“It is extremely common these days for couples to co-habit before getting married, and many couples may find themselves living unwed with their partner for much longer than they had anticipated, given the extraordinary circumstances we find ourselves in. Some may have chosen to move in at the start of lockdown to avoid being apart, and some will have expected to be husband and wife by now.
“It’s a common misconception that people living together are protected by ‘common law’ if they separate and need to untangle their belongings and finances. But this isn’t the case. You don’t have automatic rights and you can end up in a really desperate situation. So while discussing legal documents is a real passion killer, particularly ones designed to protect you when a relationship ends, increasing numbers of people are drawing up cohabitation agreements. It’s a legally binding agreement that gives a couple who live together certain rights so that they can make a financial claim in the event of separation or death. Essentially, it’s the mechanics behind the division of assets.
“Most cohabitants don’t realise that they don’t have the same rights as people who are married. You do not have any automatic rights to claim anything. This means that if you moved into a property owned by your partner (i.e. the property is in their name), you could be paying part of a mortgage but you don’t have any rights to the property if you split up or if your partner died. A cohabitation agreement can help provide certainty and take away much of the stress faced at what would be an already difficult time.
“It also helps provide clarity in the event of a separation. With a cohabitation agreement in place, all assets, including a house, are dealt with as per the agreement. Without one, if there is a house involved which is in joint names, it would most likely be sold and the sale proceeds would be split equally. This is fine if you both paid an equal amount towards the property. However it gets complicated if different amounts were paid. For example, one person might have contributed £50,000 towards the deposit and the other person £25,000. With an agreement in place, you can make sure that you get back what you are entitled to rather than just an equal, and perhaps unfair, split.
“For couples who have been together for some time, it would be worth putting in place powers of attorney, especially if bills such as council tax, or utilities are in one name only. This will enable such bills to be paid and financial decisions made if one partner is incapacitated. And finally, putting a will in place is extremely important for couples who are not married as the rules of intestacy would be used without one.
“As always, it is very important to get solid financial and legal advice before entering into any legally-binding agreement.”
Tilney is a leading investment and financial planning group that builds on a heritage of more than 180 years. Our clients are private investors, charities and professional intermediaries who trust us with over £24 billion of their assets. We offer a range of services including financial planning, investment management and advice and, through our Bestinvest service, a leading online platform for those who prefer to manage their own investments. We have won numerous awards including Wealth Manager of the Year, Best Discretionary/Advisory Wealth Manager, Best Low-cost SIPP Provider and Best Investment Platform 2018 as voted by readers of the Financial Times and Investors Chronicle; Best Advisory Service in the 2015 City of London Wealth Management Awards; and Investment Award – Cautious category in the Private Asset Management Awards.
Headquartered in Mayfair, London, the Tilney Group employs over 1,000 staff across our network of 30 offices, enabling us to support clients with a local service throughout the UK.