FOOL'S EYE VIEW
How To Live Happily Ever After

By Jane Mack (TMFJane)
December 7, 2004

Earlier this year, a survey showed that most people (61%) mistakenly believe that living together can give you the same rights as marriage. They are wrong - the notion of 'common-law marriage' simply does not exist.

You might think that moving in with your loved one will result in both of you living happily ever after. And, there's also the added advantage that by pooling your resources, your living expenses should, in theory, prove cheaper. However, if you're not careful your financial problems may double.

At this heady time your legal rights and the mundane things such as how you're going to pay the bills, are probably the last thing on your mind. Given the emotional turmoil of setting up home together, you could have a recipe for financial disaster if you don't sort things out at the beginning. But there are ways around this minefield thanks to a website which offers advice to couples who decide to cohabit.

Advice Now has produced a free 'Living Together' agreement (applicable to those living in England and Wales only) which should help to protect both partners from whatever might happen to the relationship in the future. And couples are being urged to take advantage of it even if they've already been living together for years.

The courts can enforce this type of cohabitation agreement if they choose because they're seen as binding contracts between unrelated parties. Couples who aren't married have no legal right to each other's money regardless of how long they've lived together so, if they're committed but simply don't believe in marriage, a cohabitation agreement can be a very good solution.

They can save a great deal of heartache should the relationship end and allow couples to split up as amicably and fairly as possible should the worst happen. But they can also clarify issues for couples who may never split up at all.

I must admit that when I looked at the issues raised in the agreement I'm rather appalled that my (now) husband and I didn't even discuss them when we first moved in together as cohabitees. For example, I put up most of the deposit for the house we bought together and yet we held in equal shares. If things hadn't worked out that could have been an expensive mistake on my part!

Quite apart from the thorny subject of what happens to the home should you break up, have you and your partner ever discussed in detail the following issues?

Pensions

Pension schemes through your employer will generally pay out a lump sum if you die before you retire and you can choose who you want to get this money. You'll have nominated your beneficiary when you joined the scheme but can you remember who you nominated and do you now want to change it?

Most importantly, note that while employers may pass on pensions or death-in-service payments to spouses, some do not recognise partners who merely cohabit, so it's vital that you check this through your HR department.

If you find that they won't pay out to your partner, Advice Now suggests that you don't nominate who should get the death-in–service payment at all. That way the money would be paid into your estate when you die and you can then leave the amount by Will to your partner. (This might have inheritance tax consequences, if it increases your estate, so you do need to take some advice from a solicitor or accountant before you decide to do this).

Children

What happens if you have children together? A biological mother automatically has legal 'Parental Responsibility' for her child but, at the moment, a father does not unless he's present with the mother at the registration of the birth and actually signs the birth register.

Without it, the father has no right to be involved in decisions such as where the child lives, their education, religion or medical treatment. It's not hard for you to get formal parental responsibility but these things need to be discussed and considered.

Ownership of house contents

The law is fairly straightforward on who owns what should an unmarried couple split up but it's usually better to spell it out so there's no room for argument. For example:

• If you alone paid for something or you inherited it, it belongs to you.
• If you bought something together without distinguishing shares, you own it jointly.
• If you bought something and your contributions were unequal then your share in it will be equal to the contribution you made.

But - and it's a big 'but' - what you do or say to each other at different times can change the above rules. For example, if you buy something but say to your partner 'this is yours' or 'this belongs to both of us' a court can later regard you as having created 'a trust' and can hold you to that promise. Or you may be regarded as having created a trust by implication, which means that something you said or did leads to the conclusion that something you bought is shared or given to your partner. Hence the reason for spelling things out in the agreement.

There are many approaches to money management between couples but, in my view, the key things are openness and communication and this 'Living Together Agreement' should help couples to accomplish it.

Once you've organised or clarified your basic finances, then you can concentrate on the more enjoyable aspects of living together in one home. You may even find that two can indeed live as cheaply as one!

Check out the Advice Now website and find out how to deal with a partner in debt.