On 1 September 2022, the Office of the Children’s Commissioner for England published its latest report on what a modern family life looks like in 2022, entitled “Family and its protective effect”.
The report found that, “in recent decades, a growing number of children in the UK live in so called ‘non-traditional’ families, raised by cohabiting parents, step-parents, separated parents, single parents and intergenerational families.” According to the report, as of 2021 there were 8.2 million families with children in the UK. Of these families, 63% are married couples, 14% are cohabiting and 23% are headed by a lone parent. This means that there are around 1.2 million cohabiting families in the United Kingdom.
Whilst the increase in the popularity for cohabitation is evident, there remains a distinct lack of legal protections for families who opt to cohabitate in comparison to the more “traditional family” structures i.e. where the parents are married or in a civil partnership. This means it is ever more important for families who decide to cohabitate to organise their affairs to ensure they, and their children, are safeguarded.
When a couple is married and one of them dies without a Will, the surviving spouse will receive some benefit and legal protection from the deceased’s estate under statutory provisions known as the intestacy rules. Conversely, if a couple are cohabiting and one of them dies without a Will, the intestacy rules do not benefit or protect the survivor’s interest at all. The deceased’s estate would stand to pass to their children regardless of their age or, if there are no children, close family members such as parents. It is therefore imperative that cohabiting couples ensure they have Wills in place that both reflect their wishes and afford protection to the surviving partner.
UK law allows claims by certain connected individuals to be made for reasonable financial provision against a deceased person’s estate if that person considers they are entitled to, or should have received, a share in an estate that they do not receive. Whilst cohabitees can bring such a claim, the requirements to be satisfied in order to be successful are far stricter for cohabitees than for married couples and the potential award following a successful claim is less. Furthermore, court proceedings can be extremely distressing as well as expensive and time-consuming, and so should be seen as a last resort.
Another often overlooked issue is that, even where there is a Will, a surviving cohabitee standing to receive their deceased partner’s estate does not benefit from any exemptions to inheritance tax (“IHT”) whereas surviving spouses or civil partners generally benefit from a complete exemption from IHT, the spouse exemption. Similarly, whilst married couples can transfer assets between them without triggering capital gains tax (“CGT”) or IHT liabilities, transfers made between cohabiting couples will be subject to CGT on any increase in value (subject to any exemptions or allowances) and for IHT purposes such transfers will be treated as “gifts” and potentially subject to IHT if the donor fails to survive the transfer by seven years. As a result, cohabiting couples must carefully consider their estate planning to ensure their estate is taxed efficiently both during the lives of the cohabitees and on death.
If property is held by one cohabiting partner then, in the event of breakup or death, there is no guarantee that the non-owner will acquire rights in the property. Cohabiting couples should consider both cohabiting agreements and the terms of their Wills to ensure ongoing legal protection and entitlement to assets.
Whether couples are cohabiting or married, there is a choice as to whether assets held jointly are held as “joint tenancies” or “tenancies in common”. Property held as joint tenants will automatically pass to the surviving partner on the first death regardless of the terms of any Will or the intestacy rules (but, as mentioned above, cohabiting couples would not benefit from the IHT spouse exemption). Conversely, the share of property held as tenants in common of a deceased will either pass under the terms of the Will or the intestacy rules, which as mentioned above makes no provision for a cohabiting partner. The lack of protection for the surviving cohabitee emphasises the importance of planning for death by seeking professional advice and having suitable Wills in place.
Powers of Attorney
For all adult individuals, it is advisable to have Lasting Powers or Attorney (“LPAs”) in place. In the absence of appropriate LPAs, if one partner were to lose capacity there is no automatic legal right for someone to make decisions on your behalf, regardless of whether the individual is single, married or a cohabitee.
The report also highlights the increase of lone parent families in recent years. For the purpose of the report, “the definition of ‘lone parent’ doesn’t distinguish between families with a child who solely resides with and is cared for by one parent and families with a child who lives with one parent but is cared for by two parents.” It is equally important to ensure that both parents within a lone parent family situation consider whether their Will and estate planning is conducive to both their responsibilities and wishes for their children. This can include putting in place LPAs, ensuring their Will safeguards their children’s interest in their assets, and appointing appropriate guardians and trustees in the event that they die leaving a minor child.
Given the evident rise in popularity for cohabiting families, and the continuing rise in numbers of lone parent families, it is important to carefully consider your affairs and plan to ensure that legal protections are not overlooked and to avoid subsequent issues following a death. If you have any queries about this topic, please contact Alison Broadberry, Matthew Barnett, Lara Persell or any member of the Private Client team.
If you aren’t receiving our legal updates directly to your mailbox, please sign up now
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.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.