PLAN early. We often assume that we don’t need to give much serious thought to our financial and legal affairs until much later on in life, but the reality is that young cohabiting couples are most likely to be caught out by poor financial and legal planning.
It is important to discuss these issues and put the necessary arrangements in place to ensure that both you and your partner are protected should the unthinkable happen.
Passing on your pension. Cohabiting couples need to think about this because, unlike spouses, unmarried partners do not generally fall into the category of kin that Pension Trustees will consider paying death benefits to. To ensure that your cohabitant may receive a share of your pension, should anything happen to you, you must complete a pension death benefits nomination form. Pension Trustees are then obliged to take your wishes into consideration when they look to distribute your benefits although may not follow them to the letter.
Update your life cover. Your life insurance should be set up to pay out to your cohabitant, otherwise they are unlikely to receive any benefit if it pays out in the event of your death. This is very important if you have a joint mortgage and in the event of a death, the surviving partner would be unable to make the payments on his or her own. As beneficiary of your life assurance, they will be able to use the funds towards the mortgage and can continue to live in the property should they so wish. If you don’t have a joint mortgage, this will help them with funeral and additional legal costs and help to maintain their lifestyle.
Think ahead when home buying. The sad fact is not every relationship survives long-term. Married couples with a joint mortgage have automatic legal provisions in place which will allow their matrimonial home to be sold or transferred to a sole individual should the relationship break down. A separated cohabitant can only insist on the sale of the property in court. Partners buying a property together may opt to enter into a Minute of Agreement detailing what will happen to the property should the relationship end.
Make a Will. Under Scots law, a cohabitant may apply to the court for an award from their deceased partner’s estate if they died without leaving a will. However, if the deceased had been previously married, and were not yet divorced at the time of death, their spouse would be legally entitled to a share of the estate. It’s important that you state precisely how you would like your assets to be divided, and to whom they should be given. Keep an up to date Will to ensure your partner receives exactly what you would like them to.
• Anna Evitt is a private wealth manager at Anderson Strathern Asset Management