My partner wants us to live together in my property. He would benefit financially from this as it would allow him to get a rental income from his property and invest the rest of his money in stocks and shares. He says I would also benefit as he would pay me a monthly figure to cover half the costs of living and maintaining my property.
I am concerned on two levels. First, if he pays me a monthly sum to cover the day-to-day costs of living and maintaining my property (I am mortgage free) will he, over time, become entitled to a percentage of my property if we split?
Second, if anything were to happen to me I would want my daughter (who is 21 and from my first relationship) to inherit my estate immediately, which would mean my partner having to move out. Would this be something that could be legally ensured or would a court say that he had a right to stay as I had been providing him with a home?
Suzanne Todd, head of Withers’ family law team in London, says your starting point is that you own the property legally (it is in your name) and beneficially (nobody else has a claim to share in it). However, you are right that this would change if your partner moved in, since he could claim a beneficial interest in the property.
For such a claim to be successful, your partner would have to persuade the court that you and he had either agreed, or that you had promised him, a share in the property. Therefore, the best way to protect yourself against a future claim is by expressly stating that you do not intend to share the property.
You can do this by entering into a cohabitation agreement with your partner, where you set out the basis upon which you live together and the extent to which you intend to share assets. Alternatively, at the very least, you should put in writing, and ask your partner to countersign, that you do not intend him to have any beneficial interest in the property, regardless of financial contributions he may make to household expenditure and maintenance.
However, the fact that you agree something at the outset of cohabitation does not prevent any future claims. Therefore it is important that your partner does not make financial contributions towards the property’s value — if you were to remortgage, he should not make mortgage payments, and if you were to renovate, he should not pay towards those costs. You should be solely financially responsible for costs in relation to the house. Notwithstanding this, it is not a problem if your partner were to contribute towards bills and so on. That reflects a decision to share a life and not a property.
If you and your partner were to marry, or have children together, the situation would change and you should seek further advice.
The best way to ensure certainty regarding your daughter’s inheritance is to have a valid will. A will is particularly important for cohabiting couples as they are not protected by intestacy laws. Your partner could potentially make a claim against your estate in circumstances where you have not adequately provided for him, but only if he was either financially dependent on you, or you were cohabiting for at least two years before death. Therefore, to best ensure your daughter inherits your property, you need to set it out in your will but also potentially provide sufficient provision for your partner — though the amount will depend on your respective financial circumstances at the time of death.
Katie Spooner, partner at Winckworth Sherwood, says that to protect yourself you should have frank discussions with him about finances and the use and ownership of your respective properties, both while you cohabit and afterwards if you split up.
These discussions should take place before he moves in and be reviewed or confirmed throughout your relationship, particularly if there are any subsequent changes in your circumstances that could potentially suggest a change in your shared intentions regarding property ownership; for example, should he sell his property and you jointly spend the proceeds of sale, or you have children.
I suggest that you record your decisions in writing and, to protect yourself fully, I would advise you to speak to a solicitor and ask for a formal agreement, known as a cohabitation agreement, to be drawn up recording your decisions.
An agreement entered into where you have both had the benefit of separate legal advice and have exchanged details of your financial circumstances can limit uncertainty and protect against any later costly and unpleasant litigation, should your partner seek to challenge the legal title of your property. Again, the agreement should be reviewed if there is any significant change in your circumstances so that any changes in your intentions are properly recorded.
As for the position on your death, the same open discussions I mention above should take place. It also needs to be made clear — and recorded in any formal agreement between you — that your partner’s right to occupy the property will come to an end on your death. Such an agreement would also need to set out arrangements for him to vacate. I advise you to take legal advice and make a will in the same terms as the agreement, in order to confirm your intentions.
If you are cohabiting on your death, your partner has no automatic right to your property, but he would be entitled to bring a claim against your estate. It is not possible to prevent him from doing so but the cohabitation agreement is likely to be a significant factor in the court’s decision making process.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
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I am writing with one of life’s most wonderful problems to have: what to do in the case of a very valuable piece of London property. My parents were lucky enough to buy a house in a central part of the capital back in the 1970s. It is a lovely house and if sold would be in the upper reaches of single-digit millions. Having grown up in the house myself and now raising my son there with my parents still there and in their seventies, I wondered if we should be doing something to hedge against inheritance taking the house from us? I am in favour of inheritance taxes to ensure balanced societies. However, at the risk of hypocrisy, I would love to keep the house in the family. We aren’t cash rich by any means, but would like to continue living in our community.