Valentine’s Day

With Valentine’s Day fast approaching, many couples plan on taking the next steps in their relationship. This could be a wedding, a proposal or moving in together. Amidst the romance, moving relationships forward could be a trigger for couples to consider their financial circumstances.

Moving in together

If a couple decide to move in together, it is important that finances are   structured properly to avoid potential expensive and messy untangling in the event of separation. Upon cohabitation it is always sensible to enter into a Living Together agreement or Cohabitation Deed. This agreement can set out all aspects of the day to day expenditure and how additional expenses are to be met. Agreements can also be reached about the arrangements for children. These documents will be particularly important if one party owns a property and the partner moves in. Whilst cohabitation is not akin to a marriage, it is possible that the partner who does not own the house could establish a financial interest in the property.

If the partner begins to contribute towards mortgage payments or renovations at the property, in the belief and understanding that the home is to be a joint asset, then this could result in them having an interest in the home. The law in this area is outdated and complex. If a dispute were to arise upon separation, then this would likely mean that the parties would have to dig historically to see what contributions were made at what time and based upon which conversations. This can be acrimonious, lengthy and expensive litigation.

Buying a property together

Couples may decide to buy a property together. If the parties make unequal contributions to the deposit, then this can be detailed in the documentation at the time of transfer. If proper consideration is not given to this matter at the time of purchase, it could mean that upon sale, each party receives 50% of the proceeds, regardless of contributions. If the mortgage will be paid in unequal shares and this should be reflected in how the property is owned, then this should be set out within a Living Together agreement.

Getting married

Weddings and proposals are commonplace on Valentine’s Day. Upon marriage, a couple’s legal position changes entirely. They each have automatic claims against income, capital and pensions, which did not exist prior to marriage. There will be a starting point of sharing of assets and income; the English courts will not draw a distinction between the role of a homemaker or a breadwinner, particularly where there are children of the family. Marriage is a legal contract, bringing with it legal rights and obligations. Therefore, if there are assets or income that need to be ring-fenced and protected throughout your relationship and marriage, then proper thought needs to be given to Nuptial agreements. Pre or Post Nupital Agreements will be held up in the UK Courts if they are properly drafted and legal advice has been sought.

Whilst these issues are likely to be the last thing on our minds over Valentine’s Day, considering financial matters in the long run is not to be scoffed at. In fact, having practical discussions at the outset of a relationship is sensible. If the relationship has soured, it will be much harder and potentially costly to attempt to negotiate if a couple are already at loggerheads. A little thought regarding the practicalities of a blooming romance can save additional stress later. At the very least, protecting your assets throughout a relationship can be considered your insurance policy and will hopefully never need to be relied upon.