Securing Relationships: Exploring a Companionship Agreement
If you’re considering living with a friend, it’s important to create a companionship agreement to proactively address potential future challenges.
For many older individuals, opting to live with a companion feels like a natural choice. Whether they’ve lost a spouse or find themselves alone without nearby family, partnering with someone in a similar situation offers companionship and various other benefits. Additionally, sharing living expenses can often be a more financially feasible option than living alone.
Why make a companionship agreement?
In the unfortunate event of a companion’s passing, the surviving individual may seek recourse through the Inheritance (Provision for Family and Dependants) Act 1975 (the Act). This legislation permits individuals who were financially dependent on the deceased but were not adequately provided for in their will to make a legal claim against the estate for financial support.
Courts evaluate whether there was financial support from the deceased during their lifetime and may grant the survivor a payment from the estate. If the deceased owned the shared property, the court might even grant the companion a life interest in it, allowing them to reside there indefinitely.
By establishing a companionship agreement, you delineate the terms of your arrangement and the financial responsibilities each party will assume during cohabitation. While it doesn’t entirely safeguard against potential claims on your estate, it significantly reduces misunderstandings and ensures clarity.
What to put in a companionship agreement
You can include whatever you want in a companionship agreement, but key points to cover could be:
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- Details of your understanding with your companion over ownership of your shared property
- Who will pay the bills while you live together
- You can also agree not to make a claim on the other’s estate. While the court might not follow this if your companion is genuinely in need, it is likely to be taken into account in considering what decision to make
To be able to rely on the agreement later on, it is important that you both take independent legal advice before signing.
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Our services help numerous clients and their families to proactively safeguard their wealth and optimise inheritance for cherished beneficiaries. Plan for the future now, ensuring later-life protection and certainty for your loved ones.