To Marry or Not To Marry? Co-habitees have few rights!
For many years, there has been pressure to recognise the rights and claims of so-called ‘common law’ spouses. In other words, couples who live together but do not marry. These couples are becoming an increasingly large part of the population but remain poorly protected when a relationship breaks down or one of them dies.
Recent figures have revealed that the number of people aged 16 or older in England and Wales who are married or in a Civil Partnership has been declining since 2012. This figure has now dropped below 50%. In 2022, the Office for National Statistics showed this figure to be 49.4%
Let’s look at separation and divorce first:
When a married couple divorce, their finances are dealt with under the Matrimonial Causes Act 1973 with a presumption, especially with long-term marriages, that the marital assets will be divided fairly, even if some assets are held in one party’s name only. The needs of dependent children are taken into account and the Courts have wide powers to distribute family assets, including properties and pensions.
The same does NOT apply to co-habiting couples.
The law does not recognise ‘common law’ spouses, even if the couple have been living together for a long time and have children together. If property is in one party’s name, the other party may have no claim on it or any other assets, and no right to share pensions. Challenging this through the Courts is a risky and expensive route to take and, unlike in a married couple’s divorce, the losing party may have to pay ALL the legal costs.
Let’s also consider what happens if one person dies:
In the case of a married couple (and those who have a Civil Partnership), if there is no Will, the surviving spouse inherits the deceased’s property or, where there are children, the deceased’s personal effects, the first £270,000 of their estate and half of the remainder. What is left is shared among the surviving children. If the deceased made a Will but it did not make reasonable provision for their surviving partner, a claim can be made under the Inheritance (Provision for Family and Dependants) Act 1975 and the court can consider how the assets would have been divided had the marriage ended in divorce rather than death when deciding what was ‘reasonable provision’.
Where parties are co-habiting, if the deceased has not made a Will, there is no automatic right to anything from their estate by a surviving partner even if they have been in a relationship for 10, 20 or more years. In the absence of a Will, the deceased’s property and assets may pass to distant relatives of the deceased, even if they have not been in contact for many years. Furthermore, if the deceased has children from a previous relationship, their assets will pass those children, in addition to any children with their cohabitee, but children of the survivor who are not also children of the deceased will not inherit. Whilst a surviving cohabitee can also make a claim under the 1975 Act, the court is limited to considering what is fair in order to meet their ‘reasonable needs’ but cannot go further than that.
Inheritance Tax (IHT) is also treated very differently when it comes to a married couple and a co-habiting couple. Gifts to spouses are exempt from IHT but gifts to cohabitees may not be, which can result in significant financial hardship if not considered properly.
So, what do we advise?
We urge cohabiting couples to consider what will happen should the relationship break down or one of them dies. We recommend, as a minimum, a Cohabitation Agreement which sets out assets and how they should be divided, either on death or separation. This would be made in conjunction with making a Will, and a Deed of Trust relating to any property owned by one or both of the couple.
A Cohabitation Agreement and properly drawn-up Wills will help prevent or limit expensive litigation in the same was a Pre-Nuptial Agreement does for couples intending to marry.
Temple Heelis’s team of highly experienced Family and Private Client lawyers will work together help clients understand their particular circumstances and consider suitable options, as well as advising on the process and any necessary legal documents. When relationships sadly break down, our specialists can guide both parties in a co-habitation relationship (or marriage) in reaching an agreement and documenting this. Andrew Hill, Head of the Family Department is trained and certified under the Resolution Together ‘Single Lawyer’ model, which means he can, in appropriate cases, advise and assist both parties to save time and legal costs, and reach an amicable outcome.
Please contact Andrew Hill.