Choosing to live with a long-term partner without getting married is an increasingly popular option in the UK. The Office for National Statistics (ONS) reports that, between 2011 and 2021, the proportion of couples living together who are unmarried rose from 20.6% to 24.3%.
If you’ve been living with your partner, your finances likely overlap in many ways. You may have a shared mortgage, bank accounts, or protection policies, for example.
Sadly, cohabiting couples don’t always have the same legal protections enjoyed by those who are married or in a civil partnership. So, when you separate, it’s important to understand the rules around your shared finances.
A financial planner can help you navigate any challenges successfully. Read on to learn more.
You won’t have any automatic claim to your partner’s pension if you’re unmarried
It’s common for partners to have uneven pension pots. Indeed, Money Marketing reports that almost half of separating couples with pensions see one partner holding a substantial 90% of the pension wealth.
When living and planning your future together, this may not have been a problem. You likely intended to share your pension income between the two of you. However, if you’re separating from your long-term partner, you may be worried about how much pension you’ll be left with.
Sadly, unlike married couples or those in a civil partnership, cohabiting partners have no automatic claim to each other’s pensions when they separate. As a result, you won’t be able to divide your pensions using a Pension Sharing Order, for example.
A financial planner can help you assess your pension situation as you separate from your partner and advise you on the best course of action, hopefully giving you peace of mind about your retirement.
If you have a joint mortgage, you’ll have to come to an agreement with your ex
If you and your ex-partner own a property together or have a joint mortgage, you’ll need to arrive at a settlement. One of you may choose to buy the other out and take on the mortgage, or you may opt to sell the property and split any proceeds.
This can be a difficult process, and while you work out your next steps, you’ll both fully remain responsible for any existing mortgage payments. So, to protect your credit rating, you’ll need to come to an arrangement to make your regular payments.
On a joint mortgage, both parties are individually responsible for the total monthly payment and the total debt. So, if you move out and your ex doesn’t pay the mortgage, you will be equally responsible for any money owed.
If you’re the sole owner of your home, then your ex-partner will likely have no legal or beneficial interest in your home, and vice versa.
However, if you have been living in your ex-partner’s home, you may be able to establish some entitlement to the proceeds of a sale of the property if you contributed towards the deposit or the mortgage repayments.
You may need to cancel any joint protection and take out new policies
If you and your ex-partner have joint protection policies in place, it’s important you reassess your protection when you separate.
Some joint life insurance policies have a “separation benefit” – this allows you to split your policy when you separate. However, this will depend on the policy you have.
If you can’t split your policies and you decide to cancel them or let them lapse, a financial adviser can help you put new protection in place. The appropriate financial protection can act as a safety net, helping you in the event of an unexpected shock such as being unable to work.
If you and your ex have children, you may be entitled to child maintenance
When you separate from your partner, if you’re not married or in a civil partnership you aren’t entitled to any maintenance payments to help cover your day-to-day living expenses. However, if you have children together, you’ll both be expected to contribute financially to support them.
Child maintenance is an agreement between two parents. It’s normally paid by the parent that a child doesn’t live with until the age of 16, or 20 if the child stays in full-time education.
So, if your children will live with you after you and your ex separate, you may be entitled to these payments.
How much child maintenance you could receive depends on:
- The number of children you have
- Your ex-partner’s income
- The amount of time your children will spend with the other parent
- Whether your ex is responsible for any other child maintenance payments.
If you’re worried about how separating from your partner could affect your finances, a financial planner can help ease any anxieties. Using cashflow modelling, we can forecast your income and expenditure, giving you a clear look at how your future finances may look.
Get in touch
If you’ve recently separated from your partner, we can help you feel in control of your finances and plan your next steps.
To find out more email hello@solusfinancial.co.uk or call us on 01245 984546.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.