Financial concerns when living together

Living together marks a new phase of life, in which it is important to arrange not only practical matters but also finances well with your partner. However, automatic legal protection is lacking when living together. To avoid unforeseen situations, it is wise to make clear arrangements. Here are some crucial points to keep your finances in good order during cohabitation.

No obvious right to the home when cohabiting

Moving in with your partner does not automatically give you ownership rights to the property, nor the right to rent it. The right to the home depends on who signed the purchase or rental contract. The person who signed the contract retains the right to stay in the home in case of an unexpected end of the relationship. Thus, the other partner must look for alternative housing. For more security, you can register yourself as a co-tenant or become part owner of the property, which you need to arrange with the notary.

Check your term life insurance policy

Cohabiting partners should look carefully at their term life insurance (ORV) policy, regardless of the existence of a cohabitation contract. By default, the widow/widower and children of the deceased are the beneficiaries of the ORV. However, the cohabiting partner is not automatically included in this. This can cause problems if in the future you can no longer bear the mortgage expenses yourself. Therefore, check your policy and adjust it if necessary.

Consider the partner's pension

Upon the death of one of the partners before reaching retirement age, the surviving partner is not always entitled to benefits from the deceased partner's pension fund. To have this right, partners must actively register each other as such with their own pension fund. Often the registration is only accepted if a notarized cohabitation agreement exists.

If cohabiting partners separate and they have registered as partners with the pension fund, it is important to check how the accrued retirement pension will be divided. Not all pension providers divide it automatically, whereas registered partners or married couples do. If the pension fund does not cooperate in the distribution, partners must arrange this among themselves.

Partners not automatic heirs

When living together, partners are not automatically each other's heirs. This can have significant consequences. For example, official partners may inherit up to €723,526 (2023) tax-free, while this amount is only €2,418 for unofficial partners. To avoid this, drafting a notarized cohabitation contract and will, in which partners name each other as heirs, is essential. For the Tax Office, you are each other's heir if you meet certain conditions at least 6 months before death, such as both are registered at the same address, have a notarized cohabitation contract with mutual care obligations and no other partner is an heir, both are of age and you are not blood relatives in the direct line.

Residence clause for the home

If no will has been drawn up, it is wise to include a residence clause in the notarized cohabitation contract. This means that common property passes to the partner after death. This is especially important if both partners bought a house together. Note that with only a residence clause, private assets, including possibly the house, can go to other heirs.

In summary, cohabiting partners can reduce many risks by drawing up a cohabitation contract with a notary. For advice on insurance, pension or mortgages you can always contact us. We will be happy to help you further.