Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
Cohabiting couples are now the fastest-growing family type in the UK, according to the ONS. For many, it’s a lifestyle choice; for others, it’s a second relationship later in life.
But while unmarried doesn’t mean uncommitted, it does mean different financial and legal rules apply. In this episode of Retire Well with Wealth of Advice, we explore how unmarried couples can protect themselves and each other through careful financial planning.
Unlike married couples or those in civil partnerships, unmarried partners have no automatic legal rights to inheritance, pensions, or even shared property if one partner dies.
If the relationship ends, or one partner passes away without a Will, the surviving partner could face significant financial vulnerability — even if they’ve shared a home and finances for years.
Key risks include:
• No automatic inheritance under intestacy rules
• No guaranteed access to survivor pensions
• No entitlement to unused tax allowances
• Potential Inheritance Tax (IHT) liabilities on shared assets
1. Make a Will
Without a Will, your partner will not automatically inherit anything, regardless of how long you’ve lived together. Writing a Will ensures:
• Assets pass according to your wishes
• Guardianship for children is clear
• Cohabiting partners are legally recognised
2. Set Up Lasting Powers of Attorney (LPAs)
If one of you loses capacity, an unmarried partner has no automatic right to make medical or financial decisions. LPAs can prevent costly and stressful disputes later.
Tenants in Common vs Joint Tenants
If you own a home together, it’s vital to understand whether you’re registered as joint tenants (ownership passes automatically to the survivor) or tenants in common (ownership follows each Will).
Declaration of Trust
If one partner contributes more to the deposit or mortgage, a Declaration of Trust can record those unequal contributions — protecting each person’s financial interest.
Cohabitation Agreement
A cohabitation agreement sets out what happens if the relationship ends, helping to prevent future disputes over property, savings or household assets.
Pensions and Death Benefits
Many people assume pensions automatically pass to their partner, but this isn’t always the case.
• Pensions don’t usually fall under a Will — they’re distributed based on nomination forms held by the pension provider.
• Some defined benefit (final salary) schemes only pay survivor benefits to married or civil partners.
• From 2027, pensions may count towards your estate for IHT purposes, adding another layer of complexity.
Action point: Review and update your beneficiary nominations regularly.
If you own a property or share financial responsibilities, life insurance is essential.
• It can clear the mortgage or replace lost income if one partner dies.
• To ensure the payout goes to the right person, place the policy in trust — this avoids probate and can reduce IHT.
• Consider Family Income Benefit, which pays a regular income rather than a lump sum, offering practical support for surviving partners.
Married couples benefit from several tax breaks that unmarried couples don’t:
• No spousal exemption for IHT
• No transfer of unused Nil Rate Bands (NRB) or Residence Nil Rate Bands (RNRB)
• Potential IHT of 40% on anything above the individual threshold (£325,000)
Potential Planning Options
• Make use of annual gifting allowances (£3,000 per person per year)
• Use life cover written in trust to cover any IHT liability
• Consider joint investment or ownership structures carefully
• Review both Wills and nominations to make sure assets flow as intended
Unmarried couples don’t enjoy the same spousal exemptions as married couples. This means:
• You can’t transfer investments or gains between partners tax-free
• You’ll need to plan individually to make the most of ISA and CGT allowances
A joined-up investment plan can still achieve balance — but it must be structured correctly from the start.
“My partner and I have separate pensions and savings, but we share all our living costs. If one of us dies, what happens to those pensions and investments — do they automatically go to the surviving partner?”
In most cases, no. Pensions, investments, and bank accounts held individually don’t automatically pass to your partner unless you’ve set up nominations, joint ownership, or a Will.
Taking the time to review your estate plan can ensure your partner is financially secure if the unexpected happens.
• Unmarried couples have no automatic legal rights to inheritance or pensions
• Write a Will and set up LPAs to protect each other
• Review property ownership and consider a Declaration of Trust
• Keep pension nominations up to date
• Put life insurance in trust to avoid delays and IHT
• Plan ahead for inheritance tax if your estate exceeds £325,000
For unmarried couples, financial planning isn’t just about growing wealth — it’s about protecting each other. Without the automatic legal and tax benefits that married couples enjoy, a few proactive steps can make all the difference.
If you and your partner would like to review your Wills, pensions, or protection arrangements, contact Wealth of Advice to discuss how to build a financial plan that protects both of you.
If you want a better view of what your future could be, we'll have a chat and work out if we make a good fit for you and your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
We are committed to providing products and service of the very highest standards. If you feel that we haven't lived up to your expectations in any way, however, we would like to know so we can put things right for you. If you have a complaint, make sure you contact us directly. Accordingly, we will do all we can to resolve your complaint by the end of the next business day. However, if we can't do this, we will write to you within five working days to tell you what we have done to resolve the problem, or acknowledge your complaint and let you know when you can expect a full response. Furthermore, if we haven't issued our response within eight weeks from the date you first raised your complaint, or if you're dissatisfied with our response, you can ask the Financial Ombudsman Service - www.financial-ombudsman.org.uk - for an independent review. The Financial Ombudsman Service will only consider your complaint once you've tried to resolve it with us, so please take up your concerns with us first and we'll do all we can to help.
Wealth of Advice Ltd is a company registered in England and Wales, company number 07709624.
VAT Number: GB131946515