What should cohabiting couples do to protect themselves?

Moving in together is an exciting time in a couple’s relationship.  Thoughts turn more to furniture, room layouts and paint testers and not splitting up!

There are 6 million cohabiting couples in the UK, representing 17% of all families. With this number set to increase over the coming years, it is becoming more apparent than ever that the current legal framework in England and Wales leaves these couples and families in vulnerable legal positions when it comes to death or separation.

Many people mistakenly rely on a concept of ‘common law marriage’ There is no such thing! The harsh reality however is that unmarried couples encounter issues such as:

  • No entitlement to a partner’s pension on death;
  • No right to partner’s share of property or other assets on death (including the house you share with them);
  • No right to support or financial assistance in the event of separation – even where children are involved.

To name but a few common ones.

In worst case scenarios, you will be left with nothing.  Positive action is therefore required by parties to secure protection of their interests.

As part of Resolution’s Cohabitation Awareness Week, we look here at some of the ways in which unmarried couples can protect themselves.

A Will

The advice of any legal professional will always be that anyone with assets or children or both should have a Will.  This becomes all the more important for cohabitees.

If the worst happens and you do not have a valid Will, division of assets will be dealt with under the Intestacy Rules.  These Rules do not make any provisions for a cohabiting partner but merely look to the bloodline of the deceased – for example, children, parents or other family.  Claims can be made by the surviving partner under the Inheritance (Provision for Family and Dependants) Act 1975, but as with many legal processes, this can be slow, costly and without guarantees of success at the end.  Further the surviving cohabitee could be prohibited from living in the deceased’s home if it was not in shared ownership.

A Will setting out the specific wishes of cohabitees makes things a lot clearer in these circumstances.

Inheritance Tax

Married couples benefit from certain inheritance tax exemptions e.g. on gifts and by way of transfer of their spouse’s nil rate band.  Unmarried couples do not receive such benefits.  Therefore when making a Will, it is always useful for couples to consider any IHT implications.

Property

This is probably the biggest area of concern (aside from children) that many cohabiting couples have.

When couples buy a property together (or in some instances agree that one becomes entitled to a share) it is vital that the ownership structure and intentions on death are clear and properly recorded.  We would always recommend to clients that this is done formally with the Land Registry to avoid any dispute or delay at a later date.

Property can either be held as joint tenants (whereby upon death of one the property automatically goes to the other without the need for a Will and regardless of the intestacy rules) or as tenants in common (whereby parties own a specific defined share that can be disposed of as they wish upon death).  It is important to bear in mind that when holding a property as tenants in common you could gift your share of the property in a Will to a third party but you may wish to allow your partner to remain occupation until their death.

Cohabitation Agreement

This is like a prenuptial agreement and can set out things such as:

  • What happens on separation;
  • Who is responsible for household expenditure and in what proportions;

Cohabitation agreements can help settle disputes but they are also a useful discussion tool for couples to set out their intentions at the outset.

It is important to remember however that cohabitation agreements are not set in stone.  The Court can set these aside if circumstances have changed since they were created e.g. if you have had children.  They should therefore be reviewed and updated regularly.

At Sherrey & Associates we are experienced in helping cohabiting couples either with a cohabitation agreement or through some of the more complex issues arising in the absence of an agreement.  For further information about how we can help please visit our website or give us a call on Worcester 01905 349217/Wolverhampton 01902 302969.