If you are thinking of living with a friend, then you should also consider making a companionship agreement to avoid difficulties in the future.

For many older people, living with a companion is a natural choice. They may have lost their spouse or be living alone with no family nearby. Teaming up with someone else in a similar situation means companionship for both of you as well as all of the other benefits of living with a friend. It can also be a more cost-effective option than solo living.

Why make a companionship agreement?

If someone who was living with a companion dies, the survivor may be able to bring a claim against the deceased’s estate under the terms of the Inheritance (Provision for Family and Dependants) Act 1975 (the Act).

The Act allows individuals who have been supported by a deceased person and who have not been provided for in their Will or who have not received sufficient money to maintain them, to bring a legal claim against the estate for financial support.

The courts will consider whether they believe the individual to have been financially supported by the deceased during their lifetime and, if so, may award them a payment from the estate.

If the deceased owned the house that they shared, then it is also open to the court to award the companion a life interest in this, meaning they could stay living there as long as they want or need to.

By making a companionship agreement, you have the opportunity to set out the agreement you and your companion have reached and the financial obligations each of you will take on while you live together. While this does not guarantee that a claim will not be made against your estate, it will go a long way to preventing misunderstandings and ensuring everyone understands the situation.

What to put in a companionship agreement

You can include whatever you want in a companionship agreement, but key points to cover could be:

• 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 both of you take independent legal advice before signing.