Co-habiting breakups: How to split your finances

WIth Tommy Fury and Molly-Mae Hague announcing their split, here are some tips from Charles Stanley on how to break up from a financial planning perspective

 
The number of unmarried couples is on the rise as many people are either delaying marriage or choosing not to marry altogether.  According to ONS figures, cohabiting couple families accounted for 18% of families in 2023.

As like any other family type, there are some important considerations which should to be factored in early should anything happen in order to minimise complications down the line, particularly if there are children involved.

Breaks-ups are never easy and adding to the heartache is splitting assets. But this can be even more difficult if you don’t have a cohabitation agreement in place. And if a cohabiting couple splits up, they also don’t have the same legal rights to property as a married couple. To help ease the financial strain, Mia Kahrimanovic, Financial Planner at Charles Stanley shares five areas you need to discuss when separating.
 

1. Have a cohabiting agreement in place

 
They’re not the most romantic of things to discuss with a partner, but they’ll give some financial certainty to both sides. Whereas in a marriage there is some security in terms of finances and property, there too should be something in place for cohabitees to protect either interest or proceeds in the property. Should the relationship end, the agreement can spell out not only how the property will be split, but also what will happen to its contents, any personal belongings, savings, or joint purchases. It will also encourage you to think about your financial goals.
 

2. Understanding the assets you

 
The first step in the process is to draw up a list of assets that may need to be divided – pensions, property, and investments. The house and pension fund pots will generally form the largest two assets and dividing them can be complicated. Seeking help with a financial adviser or a lawyer could help with understanding what you’re entitled to and what you should be requesting.
 

3. Put the children first

 
Going through a separation is always difficult, but if children are involved, it can become even more complex. So before you consider how you split your assets, you should ensure your children are well provided for. Once you have agreed on custody arrangements, you need to discuss the financials. How will both parents be contributing to day-to-day costs, any school fees you may have, clothing and clubs – the list could go on.
 

4. Change your will 

 
If you are going through a divorce or separation, then you may need to change your will to accommodate your new circumstances. Make sure you update this as soon as possible to ensure that your wishes are granted.
 

5. Update financial products and policies  

 
When going through a breakup, it’s easy to focus on the big financial assets – investments, the family home and pensions – but what about other financial products you have such as insurances, bank accounts, monthly subscriptions? The list could go on. Once you have agreed on the split of the big financial areas, then it’s important to consider all other financial products that need to be split accordingly. Not doing so could impact your financial future.

Mia Kahrimanovic, Financial Planner at Charles Stanley comments: “While they don’t scream romance, it’s really important that couples ensure they have agreements or plans in place to protect themselves financially if they were to break up. Things like cohabitation agreements can ultimately save potential despair down the line, though they tend to be unfamiliar to people or underused. Unlike married couples, laws are not in place to protect cohabitees. And yet we’re seeing more and more couples opting to live together and not tying the knot, leaving themselves financially at risk. We would urge couples to look into cohabitation agreements and to not be scared to discuss this with their partners. Although these can be difficult conversations to have, they are important and can give you some financial certainty should anything happen.”