The practicalities of property ownership

Romance can make the world a brighter place but as any long-term couple will know, in day-to-day life there are a lot of practicalities to consider when it comes to making a relationship work.  One of these is considering how assets will be managed, in particular, who actually owns them and who pays for them.  A property is generally a huge asset so it makes sense to give serious consideration to the formalities of its ownership.  Here are some common scenarios and points to consider with regards to each of them.

Couples in legally-recognised unions buy a property together If you are in a permanently-recognised legal union then for practical purposes, you and your spouse are recognized as two separate but equal halves of the same whole.  Holding a property as joint tenants would reflect this since it would give you equal shares in the property and equal rights over it.  It would also mean that if one of the parties died, the other would automatically inherit their share of the property.  Where a property is bought with a mortgage, life insurance may be necessary to ensure that the survivor can continue to live in the property (or at least sell it on their own terms), which raises the question of whether or not each party should take out an individual life insurance policy or whether they should take out a joint policy.  There is no right or wrong here, but there is the hard fact that joint life insurance policies typically pay out once (on “first death”) and then terminate, which means that if life insurance were still required, the survivor would have to take out a new, individual, policy in any case and the cost of life insurance goes up with a person’s age.

Couples in non-legally-recognised unions buy a property together Whatever your views on the laws surrounding marriage, civil partnerships, divorce and dissolution, the fact is that there are laws so there is a legal framework in which couples operate, whether they like it or not.  Couples outside of this structure need to put their own framework in place.  They can buy as joint tenants if they wish and this may be an appropriate choice for couples in long-established unions who are confident that they will be together until death parts them, but otherwise it may be more appropriate for them to buy as “tenants in common”, which puts the purchase on a more business-like footing and gives each purchaser their own share in the property.  These shares can be of different sizes and each purchaser can treat their share as they see fit, for example they could sell it on to a third party or bequeath it to someone other than their partner.  Tenants in common can still take out joint life insurance if they wish, however it might be more appropriate for them each to take out their own life insurance policies to reflect that fact that they are still acting as legally-independent units.

One half of a couple moves into a property which is owned by the other half of the couple This may be the trickiest situation of all since there are so many possible variations.  Rather than try to cover them all, we’ll just offer a basic rule of thumb that if you contribute to the purchase of a property in a meaningful sense then it could make a great deal of practical sense to have that contribution recognised legally by having the property ownership transferred to being one of tenants in common, always remembering that the tenants’ shares can be of different sizes.  You would then have to consider what would happen to both your partner and your share of the property in the event of your death. Your property may be repossessed if you do not keep up repayments on your mortgage.