When people first embark upon a new relationship, they rarely consider what will happen when it comes to end. But they would be wise to. On top of the obvious emotional turbulence people go through, there is a financial side to consider.
Early on Saturday morning, I returned to BBC Breakfast to discuss the issue. The conversation was prompted a study which suggested that as many as two million Britons had been saddled with debt because their former partner had continued to spend money after they had separated.
This could be seen as an example of a ‘dirty divorce trick’ perpetrated by a jilted spouse. However, as I pointed out, if such behaviour happens between married couples there is an avenue for redress. Under the Matrimonial Causes Act, the courts can split the debt between the two parties based on their financial needs. Although they may both be primarily liable, the court can award more assets to the paying party, including spousal maintenance to cover the repayments.
There are no such protections for those who are unmarried and living with their partner. In long-term relationships, some couples may set up joint bank accounts even if marriage is not in their immediate plans. This helps when it comes to all kinds of expenses, such as a mortgage or rent, and paying the bills.
Unfortunately, the advantages of such an arrangement come to a screeching halt once the relationship has broken down. Living with someone does not create a legal relationship between two people, so if a couple takes on debt jointly and then split up both can end up stuck – and one may be worse off than the other if that party defaults.
Unmarried couples who are thinking about buying a home together need to consider what will happen to the deposit if they break up. Another thing to keep in mind is how the net proceeds from selling the house will be split. Luckily, there are measures which offer some degree of protection. A declaration of trust or a cohabitation agreement can regulate what will happen in the event that their relationship breaks down.
In short, they need to seek legal advice. I cannot emphasise the importance of that enough. It may seem cynical to think about a relationship ending when taking the big step of buying a home, but it isn’t cynical, it’s pragmatic.
It is undoubtedly awkward to talk about money during the emotional rollercoaster of a breakup, so I also recommend counselling. It can really help each party get their head on straight before they have to make difficult financial decisions.
I shall leave you with my final thought from the BBC Breakfast conversation: if you thinking about something with financial implications ask yourself if you could afford it if the relationship breaks down. If you couldn’t, don’t do it.