Until assets do us part

Cohabitees have fewer claims on each other.
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The Independent Online
YOU may trust him now, but will you still trust him in a few years, when you are at loggerheads and on the verge of a split?

Not the most immediate preoccupation when you are in love and about to get married - or thinking about moving in together. But with 30 per cent of UK marriages ending in divorce, and countless unmarried relationships going down the tubes, effective planning now will not only give you a sound basis for your future together but also take the heat out of things if you part.

For unmarried partners, too much independence can be a bad thing. Whereas wedded couples are subject to a whole raft of legislation to deal with maintenance on the breakdown of a relationship, if you merely live with someone - be it for many years - you do not necessarily have any legal claims to their assets. The concept of common-law marriage will not help you, according to Richard Smith, head of family law at Paris, Smith and Randall, the Southampton-based firm of solicitors. Even if you have children together, the higher-earning partner is only obligated to the children. When a property is solely in the man's name, he may kick a woman out when a child for whom it is held in trust comes of age.

If your name does not appear on the deeds of the house, unless you can prove you have helped to alter or improve the fabric of the property (sometimes difficult), you will not get any interest in it. It makes no difference whether your contribution to the household has been far-reaching in other ways - like paying the bills. Married spouses on the other hand, especially those with kids, will probably get half the property.

Inheritance rules are different, too. Unlike marrieds, cohab-itees' estates do not automatically pass to the surviving partner on death. If there is no will to the contrary, the beneficiaries are the dead person's blood family. The bereaved partner gets nothing. (A joint tenancy agreement does give rights on property though.)

Little wonder then, that in a recent survey commissioned by the life insurance arm of Barclays Bank, married people were almost twice as likely as co-habitees to be open about financial information with each other. Cohabitees have far fewer rights on each other's assets.

For a more equitable arrangement, Sophie Hughes, partner at the London firm of Anthony Gold, Lerman & Muirhead, suggests couples come to a cohabiting agreement. These contracts afford protection if people split up by determining the distribution of assets, and she says the contracts are generally enforceable by law. Ivan Massow, at specialist gay financial adviser Ivan Massow Associates, points out that couples can cut out heavy legal costs if they settle things while still on good terms.

Pre-nuptial agreements are similar to cohabiting ones but are only sometimes enforceable. As the pair's circumstances change with time, they become less and less so. If children arrive, agreements become worthless. To give more weight to the arrangement, people need to be able to show that no-one has been forced into signing up. But rich people who do not want to risk sharing their assets might be best advised not to get married at all.

Some types of insurance also favour married couples over cohabitees. Motor insurers such as Prospero can give up to a 25 per cent extra discount for couples who have tied the knot. Mark Ramsden, Prospero's R&D manager, says this is because they are better risks and the company has a better claims experience than for cohabitees. He speculates this may have something to do with the more limited lifestyle associated with rearing babies.

Couples buying a house together should consider the best legal arrangement with the solicitor who does their conveyancing.

In most cases, both names should appear on the deeds. An exception is if one partner is likely to go bankrupt. In which case, to avoid losing the house, it should be in the sole name of the other partner.

You then have to decide between joint tenancy and tenancy in common. The former is a type of ownership where you are both jointly and separately liable for the whole mortgage debt. With tenancy in common, each party is still liable for the whole of the debt but has a bespoke stake in the property, which is ring-fenced if the other party goes bust. You may be forced by the mortgage lender to sell up, but you keep any value from your chunk of equity.