Your financial position in a new relationship

It’s important you both talk about how you’ll sort out the household finances.

Your new partner might have different ideas to you about how to pay the bills and manage the money.

Or you might want to take control of the finances – for example, 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’ll split the bills.

If you’re planning to marry or form a civil partnership, you might 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 state 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 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 gets an inheritance or buys a second property.

It can also be used if there’s a change in circumstances – for example, if you have a baby.

In England, Wales and Northern Ireland, prenups and postnups aren’t fully legally binding. But the courts take them into account 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
• neither of you were pressured into signing the prenup
• it was fair (what’s ‘fair’ will depend on your specific case)
• there was full financial disclosure (that you were open with each other about your money).

If you and your partner are considering a prenup or postnup, it’s important to get independent legal advice.

You’ll need a solicitor to draft the agreement.

If you’re moving in with your new partner but not planning to marry or form a civil partnership, it’s a good idea to draw up a ‘living together agreement’.

This is because couples who live together have very few rights in law if their relationship ends.

If you and your partner split up, a living together agreement could save a lot of worry (and possibly legal bills).

It sets out what you’ve agreed to do about your home, possessions, bills and debts.

If your dispute ended up in court, the court might override some of it – but having a living together agreement is probably better than having nothing.

One decision you and your partner will have to make is whether to open a joint bank 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 all the money.

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’re each responsible for paying off the whole debt.

Second, when you take out any form of joint credit, your credit records (which show how quickly 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.

You might need to review the insurance you have after you and your new partner move in together.

If you have a joint mortgage, it’s important to take out life insurance (or check that existing policies provide the right cover).

Find out more in our guide Life insurance – choosing the right policy and cover.

• You might also need to increase the amount of cover on your home insurance. Find out more in our Review insurance for your home and possessions on separation guide.

If you remarry or enter a new civil partnership, any spousal maintenance (called periodical allowance in Scotland) you get will stop.

And if you move in with your new partner, without marrying or forming a civil partnership, payments might continue but the amount could change.

Child maintenance payments might also change if the paying parent has other dependants living with them – such as stepchildren or children born to a new partner.