Your financial position in a new relationship
If you remarry or form a new civil partnership, or live with a new partner, it’s likely to affect your finances. It should mean you spend less because you share household costs and it could also mean you open a joint bank account or take out a mortgage together. Find out the best way to arrange your finances.
- Prenuptial and postnuptial agreements
- Living together agreements
- Joint or separate bank accounts
- Joint loans and debt – what it could mean for your finances
- Life insurance for you and your partner
- Changes to maintenance and child support payments
It’s important that you talk about how you’ll sort out the household finances. Your new partner may have different ideas to you about how to pay the bills and manage the money.
Or you may want to take control of the finances, if you had a bad experience with a controlling partner in your last relationship.
It’s better if you and your partner can agree how you will split the bills.
Talking about money isn’t always easy. If you find it difficult, read our guide Talking about money with your partner.
Prenuptial and postnuptial agreements
If you’re planning to marry or form a civil partnership with your new partner, you may want to protect your financial position by taking out a prenuptial agreement (prenup) or a postnuptial agreement (postnup). These are legal documents that will set out what you’ve agreed.
For example, it could say that one of you won’t make a claim against the other for a share of their business, investments or a family inheritance that they had before you got married or formed a civil partnership.
A postnup, which is taken out after a couple has married or become civil partners, is often used if one partner comes into an inheritance or buys a second property. It can also be used if there is a change in circumstances, for example if you have a baby.
What is the legal status of prenups and postnups?
In England, Wales or Northern Ireland, prenups and postnups are not fully legally binding, but they are taken into account by the courts if you divorce or dissolve your civil partnership.
In Scotland, prenups and postnups are legally enforceable.
The court would want to know that:
- you had both taken independent legal advice
- there was full financial disclosure (that you were open with each other about your money)
- neither of you were pressured into signing the prenup
- it was fair (what is ‘fair’ will depend on the circumstances of your case)
If you and your partner are considering a prenup or postnup, take independent legal advice. You will need a solicitor to draft the agreement.
Living together agreements
It’s a good idea to draw up a ‘living together agreement’ if you’re moving in with your new partner but not planning to marry or form a civil partnership. That’s because couples who live together have very few rights in law if their relationship ends.
If the worst were to happen and you and your partner split up, a living together agreement could save a lot of worry and heartache (and possibly legal bills). It sets out what you’ve agreed to do about your home, possessions you’ve bought or own, bills and debts.
If your dispute ended up in court, the court may override some of it, but if you have one it’s probably better than having nothing at all.
Joint or separate bank accounts
One decision you and your partner will have to make is whether to open a joint bank account. Many couples choose to pool their salary, earnings and other income (such as pensions and benefits) in a joint account.
A joint account can be more convenient, but it does have disadvantages. The main one is that the bank or building society can ask either one of you to pay off the whole debt on a joint account (such as an overdraft) if they wish.
That means if you and your new partner split up and he or she refuses to pay, you could be asked to repay every penny.
Joint loans and debt – what it could mean for your finances
Before you and your new partner take on any joint loans, such as a bank loan or a mortgage, it’s important to be clear about what it could mean for both of you.
First, you are each responsible for paying off the whole debt. Second, when you take out any form of joint credit, your credit records (which show how promptly you’ve repaid money you’ve borrowed) become linked.
This means that if you or your partner applies for credit in the future, the lender will be able to check both of your credit records. If your partner hasn’t repaid their debts on time, or – worse – has been declared bankrupt, it will affect your ability to get credit.
Life insurance for you and your partner
You may need to review the insurance you have after you and your new partner move in together. If you have a joint mortgage, you should take out life insurance (or check that existing policies provide the right cover).
You may also need to increase the amount of cover on your home insurance.
Changes to maintenance and child support payments
If you remarry or enter a new civil partnership, any spousal maintenance (periodical allowance in Scotland) you receive will stop.
And if you move in with your new partner, without marrying or forming a civil partnership, payments may continue but the amount may change. There might also be changes to child maintenance payments if the paying parent has other children living in their household (e.g. stepchildren or children born to a new partner).
Your next step
If you receive maintenance for yourself or pay it to your ex-partner, find out about changes that may affect maintenance payments.