You probably won’t be surprised to read that cohabiting couples are currently the fastest growing family type with reports of over 3.4 million couples currently cohabiting in England and Wales. Despite this, couples who cohabit have much less legal protection than those who are married or in a civil partnership in the event of their death or separation. In light of this, the Women and Equalities Committee has recently launched an inquiry into the rights of cohabiting couples and have sought evidence from individuals, legal practitioners and organisations.  The deadline for written submissions was Sunday, 4 July 2021.  The purpose of the inquiry is to consider what, if any, legal protections could be introduced for cohabitees.

The Law as it stands

There is a long held, general misconception that cohabiting couples have similar rights to married couples.  In fact it has always been the case that couples who cohabit but who are not married or in a civil partnership are not adequately protected in law. Cohabiting couples should therefore bear the following in mind.

Intestacy rules and provision on death

  • English intestacy rules (the rules that deal with the devolution of a person’s estate where they die without having a valid Will) make absolutely no provision for a surviving cohabitee. This is the case even where cohabiting couples have been together for a long period of time or have children together.
  • Where certain classes of dependant individuals (including some cohabitees) are not sufficiently provided for by Will or, as is more likely, under the intestacy rules, there is legislation which permits claims to be made against a deceased person’s estate for reasonable provision. Claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) could mean that a surviving cohabitee is in a position where they are bringing claims and litigating against their own children. Court proceedings can also be time consuming and very expensive, and so should be considered as a last resort.

Property considerations

  • Where a cohabiting couple own or buy a property together, care is required at the time of purchase as to how the couple are to “hold” the property. If the property is held as tenants in common, if either party were to die, their share of the property would pass to their estate and pass under the terms of their Will or the intestacy rules. Conversely, if it is held as joint tenants, the share belonging to the partner who has died passes automatically to the survivor.   Cohabiting couples should determine which type of ownership is more appropriate to protect their particular wishes.
  • Where a cohabiting couple live in a property owned by only one of them, there is currently no way for the surviving non-owning partner to benefit from the property in the absence of a Will. Again it would be necessary for the survivor to apply to the court for reasonable financial provision under the 1975 Act. The surviving cohabitee can therefore be left with no entitlement to remain in a property which they had considered to be their “family home”.

Tax considerations

  • Marriage or civil partnership changes how certain tax rules apply to couples during their lifetime. It also changes the inheritance tax (IHT) implications on death. Generally speaking, if a couple is married or in a civil partnership, they can leave everything to their spouse with no IHT charge (known as the spouse exemption). The IHT charge is essentially deferred until both parties have died so that the estate is only taxed once at 40% before their joint estate passes to their children or other chosen beneficiaries. However, on the death of a cohabiting partner the assets of the first to die would be subject to IHT on any value over any available nil rate band (currently £325,000), other exemptions or reliefs – this is particularly problematic where, as is often the case, the vast bulk of the wealth is in the family home.

Practical matters

Although the inquiry launched by the Women and Equalities Committee is definitely a step in the right direction, it will no doubt be quite some time until we see any change and, until that time, cohabiting couples should be sure to take appropriate advice and take necessary steps to ensure they protect and provide for themselves and their loved ones.

It is therefore advisable for cohabiting couples to take advice about the potential IHT implications on death (and how it might be mitigated or funded), on the ownership structure of their assets and to put suitable, personalised Wills in place.

If you have any queries about this topic, please contact Matthew Barnett or any member of the Private Client team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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