Grandma has left you some money, or the bank of mum and dad has lent you some. You decided to use the money to get on the housing ladder with your boy/girlfriend. How exciting!
Now that you own a valuable asset, it is time to think about what would happen if you were no longer around. If you arranged a mortgage you probably did the sensible thing and took out life insurance? So that your boy/girlfriend would not be left paying your half as well, but what about the stake you actually own in the property? In other words, who should have the house (or the cash if it were sold)?
It is an important first step to set out who owns what. A lawyer can do this via a declaration of trust. This allows you to state that, although you are both on the title to the property, you actually own unequal shares in the underlying value (the equity). There are good reasons for doing this. You may have contributed different amounts to the deposit and may be paying different amounts towards the mortgage. Should the split of the equity equal the contributions to the mortgage? Should it always be 50:50? Should you get what you pay for (so the split varies over time)? You should think carefully about this question and beware of settling for 50:50: this might mean a huge gift to your boy/girlfriend, especially if the property goes up in value.
A declaration of trust can also deal with issues such as contributions to the mortgage and who should pay for repairs and bills.
The next thing to think about is making a Will. Our guide to Wills explains why it is important to have one when you are living with someone you are not married to. In a nutshell, you need to think about two issues. Where is your partner going to live if you die? And should the money you used to buy the property go back to your family?
Thinking about death is not easy, particularly if you are in your 20’s and no couple starting out together wants to think about what could go wrong. You are buying a home together so you are probably feeling confident about the future but deciding on basic questions of ownership now will help protect you both if that unfortunate day does come.