In our weekly series, readers can email any question about their finances, to be answered by our expert, Rosie Hooper. Rosie is a chartered financial planner at Quilter Cheviot Financial Planning and has worked in financial services for 25 years. If you have a question for her, email us at [email protected]
Question: I currently live with my partner, teenage daughter, and elderly father. When my mother passed away a few years ago, my dad and I sold both of our houses and bought a large house for all of us (I was not with my partner at that time).
The house is currently worth around £500,000 and is in my name only, as dad wanted to save me any hassle and upset when he passed away. My dad has around the same amount in savings as I owe on the mortgage.
My children are worried the house will go to my partner, even though we are not married and it is in my name. For complete security, I am looking to boost my pension pot – how can I do this?
Answer: This is clearly a very emotionally and financially complex situation. You’re juggling a demanding job, a teenage daughter, a 90-year-old father, and concerns about your long-term financial future, all while navigating the legal and emotional complexities of a blended family. It’s no wonder your generation is often described as the sandwich generation.
From your letter, a few key themes emerge: how to strengthen your retirement position, how to protect the family home, and how to navigate future decisions like marriage in a way that doesn’t jeopardise your assets or your peace of mind.
Your father’s intention was to secure you a home without added stress after your mother’s passing. If the property was gifted from your father to you, HMRC would treat it as a gift with reservation, meaning if he continues to live there rent-free, it may still count as part of his estate for inheritance tax (IHT) purposes.
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In practical terms, this means that even though the house is legally in your name, part of its value might still be included in your father’s estate when he passes away.
However, judging by the size of your father’s estate, this may not ultimately prove to be an issue, as the total value is likely to fall within the available nil-rate bands.
If you were to marry your partner without a prenuptial agreement, the house could potentially become a marital asset in the future.
Your concerns are valid, particularly, as you said the last two divorces have cost you dearly.
A properly drafted legal agreement is essential to protect the asset, especially if your children are worried about it passing to someone else.
You have several pensions totalling around £35,000, and your Local Government Pension Scheme (LGPS) is forecasting £1,000 a month at age 60. While this provides a helpful base, it is understandable you’re concerned it may not be enough to retire fully on.
It is worth asking the LGPS for an early retirement factor breakdown. They can show you the impact on your pension if you retire at 60 versus 62 or 65. Even delaying retirement by a couple of years can make a meaningful difference if you rely on the £35,000 in pension pots.
Another area to look at is your National Insurance record for your state pension. If you don’t have a full record of contributions, you can go back six years to fill any gaps. This could significantly boost your future state pension.
You currently have £11,000 in premium bonds, but these offer low and unpredictable wins. It may be worth moving some or all of this into a high-interest cash ISA or fixed-rate bond to provide more reliable growth. It may be worth considering this now as savings rates are falling alongside the Bank of England’s base rate.
You’ve also mentioned that you would consider downsizing, and this could unlock cash to help supplement your retirement income, too.
However, the biggest unknown is your household spending. Mapping out your monthly outgoings and what you expect them to be in retirement is essential. It will help you see how far your pension will stretch and whether part-time work or a phased retirement might be needed.
Also, if your partner is living with you, it’s reasonable to expect him to contribute towards the bills or mortgage, which would ease your financial burden.
However, you should be aware that if he starts contributing towards the mortgage or other costs related to the property, he might later have a claim on the home. This is why it’s important to seek legal advice and consider putting a cohabitation agreement in place to clearly outline financial boundaries and protect your assets.
Marriage is on the horizon, but you don’t need to rush. It is absolutely okay to prioritise your financial and emotional stability before making legal changes. If and when you do marry, ensure legal protections are in place. A cohabitation agreement now and a prenuptial agreement later (done properly, not scribbled in a notebook) can ensure clarity for everyone involved, especially your children.
You’re clearly trying to do the right thing by everyone, but you mustn’t lose sight of what security looks like for you. It is easy to sleepwalk into a situation where your financial vulnerability increases over time. With a bit of planning now, you can protect the home, shore up money for your retirement, and still plan a positive future with your partner.
Rosie Hooper, chartered financial planner at Quilter Cheviot
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