Pension provider AJ Bell has encouraged people to get the document in place
Pension savers and others planning for their financial future have been warned not to cut corners when filling in your paperwork. Large pension provider AJ Bell has issued a warning about the prospect of ending up in court with a judge scrutinising your details.
As potential legal changes loom for unmarried partners, experts have urged cohabiting couples to get comfortable talking about money—starting with one crucial document. The UK Government is currently considering granting enhanced legal rights to cohabiting couples – those who live together without being married or in a civil partnership.
The proposed rules, which would apply to couples who have lived together for at least three years or who share a child, could grant individual partners rights to assets such as a share of property sales following a breakup. With ministers reviewing consultation feedback on the proposed changes, financial and legal experts appeared on the BBC’s Money Box podcast to share guidance for couples on how best to safeguard their finances.
A ‘will’ for living together
Even under current law, experts recommend putting a cohabitation agreement in place. Laura Suter, director of personal finance at AJ Bell, explained that the document functions similarly to a will, laying out how finances and assets should be divided if a couple splits or if one partner passes away.
While broaching the subject can feel awkward, Ms Suter said it’s worth having these discussions, to think about how you would divide your pensions and other assets. She said: “I think people just really need to think about having these open conversations and then think about things like pensions, think about who owns which assets and where they’re going to go in the case of a split, think about any children and maintenance for them, what’s going to happen to the main home.
“There’s lots of different kind of elements to it that people need to consider.” While you can search online for a low-cost template to complete the form, Ms Suter strongly said seeking professional legal guidance may be worth the extra cost.
‘Questioned in court’
She told listeners: “There’s templates that you can fill in and do it without the legal advice. It’s obviously cheaper. However, it’s much more likely to not be questioned in court and to be held up if you did separate or if one of you died if you’ve got that kind of legal advice. So it’s definitely worth looking at the cost of that and seeing whether that’s an option for you.”
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The show also spoke to specialist family solicitor Hannah Saxe, from Brabners law firm, to get her thoughts. She also said it’s worth getting an agreement in place.
The lawyer said: “My key takeaway there really is to consider a cohabitation agreement. As we’ve said, it doesn’t sound very romantic and it might seem like a big undertaking, but at the end of the day, what it could potentially do is save you a lot of money on lawyers if there’s going to be a dispute further down the line if you do split up, and a lot of stress.
“And it also gives you certainty about what’s going to happen whilst you’re in your relationship.” Should the Government’s proposed legal rights take effect, Ms Suter said that many couples may finally have to talk with each other about the financial implications of their relationship.
She said: “I think what this proposal, if it comes through in its current format, will force a lot of couples to do is to really just open up that conversation. For some people that is going to be quite uncomfortable and they’re not going to see eye to eye, but that’s the case with lots of things in a relationship, and lots of people will have to navigate their way through that.”
