More and more couples are moving in together and having children without getting married. Times are changing and families are evolving. However, whilst some couples might have thought what would happen to their home and assets in the event they separate, less may have thought about what would happen in the event of serious ill-health or death.
There are big differences in the law between married couples and cohabiting couples that everyone should be aware of.
We set out the answers to some common questions below.
Should I make a will?
Yes, everyone should have a will and your need for a will is greater than most.
Cohabiting couples aren’t afforded the same rights as married couples. The law makes no provision for your cohabiting partner to automatically inherit from you without a will being in place (and so they may not get a penny from your estate).
A lot of cohabitees have to rely on discretion to be awarded part of their partner’s pension and may have to face an uphill battle to prove their relationship and show they are dependent. Unmarried couples don’t have the right to benefit from pensions or life insurance policies, unless stated formally as a beneficiary.
Unmarried couples also have no rights to inherit state pension should one partner pass away- this is only available to civil partners and married couples.
What your partner would receive in the event of your death depends on how you own your property. If your home is owned as beneficial joint tenants, it will automatically pass to the surviving partner on death, regardless of whether you have a will (and regardless of whether that is what you would want). The same applies for any other jointly owned assets.
If you would not want your property to automatically pass to your partner upon death, then you should sever the joint tenancy to become tenants in common. Owning your home as tenants in common means your share in the property will pass in accordance with your will (if you have one) or under the intestacy rules if not.
The intestacy rules will apply to all of your property that isn’t owned jointly with your partner (or to your share of any property owned as tenants in common).
What do the intestacy rule say?
- Children – if you have children, your assets will be shared equally between your children. They would receive their share automatically at the age of 18. You may not want your children to receive large sums of money at such a young age and, without a Will, the law provides no protection.
- Parents - if have no living children, your estate would pass to your parents. This may not be what you would wish to happen and, as the assets will be added to your parents’ estate, this may create Inheritance Tax problems for them.
- Other family members - if you have no living children, your estate would pass to siblings, grandparents, aunts and uncles (in that order).
- The Crown - in the event that you have no living family, your estate would pass to the Crown (even if you have lived with your partner for many years).
This may mean that your partner would be forced to sell property and move homes upon your death.
It's important to think about what you would want to happen, whilst you can. Having a will makes it clear what your wishes are and can avoid additional suffering, expense and disputes when you are gone.
What happens if my partner has died and has not made provision for me?
If your partner has died without a will, or has made a will but left insufficient financial provision for you under that will, your only option would be to contest the will or intestacy under the Inheritance (Provisions for Family and Dependents) Act 1975 – this is often referred to as the 1975 Act.
Not all cohabitees can bring a claim under the 1975 Act though, as you must demonstrate to the Court that, for the whole period of at least 2 years prior to death you lived with the partner in the same household, as a married couple or civil partners. There is some flexibility in instances where couples have spent part of the week in separate households, were not formally living together or who have had temporary separations during the 2 year period (eg. for hospital stays).
However, this is vastly different from the law for married couples or civil partners, as they are automatically able to bring claims under the 1975 Act by virtue of their relationship status, regardless of their living arrangements.
Even former spouses can apply under the 1975 Act (provided they have not subsequently remarried or entered into a new civil partnership) but the same is not possible for former cohabitees.
If you were living together for 2 years, then you would need to show to the Court that reasonable financial provision has not been made for you, and what that reasonable financial provision would be.
Cohabitees (unlike married couples or civil partners) can only claim provision for their maintenance. This means that if you have a comfortable income, it’s unlikely that an award will be made.
The Court will always consider a range of factors including needs, resources and personal circumstances. However, for married couples and civil partners, the court will also consider what provision might have reasonably been expected had the marriage or civil partnership ended in divorce on the day of death. This cross-check is not available for cohabitees.
What happens if my cohabitee makes provision for me under a will?
You will not benefit from the same exemption under Inheritance Tax that married couples and civil partners enjoy.
If you inherit a large amount of assets, or receive your partner’s share in a joint property, the tax burden may make retaining the home financially difficult.
It was noted recently in a House of Commons report that although there are provisions whereby you might be able to pay tax in instalments (with interest) this can become unmanageable for someone who does not have the financial means to pay.
What happens if my cohabitee becomes seriously ill whilst we are living together?
Unlike married couples, unmarried couples are not automatically each other’s next of kin. This means that they have no automatic legal right to make decisions about each other’s medical treatment should one partner lose capacity.
It’s really important for cohabiting couples to ensure that they have set up Health and Welfare Lasting Powers of Attorney, in the event they want their partner to be able to make key decisions on their behalf when they are unable to. This type of LPA will allow an attorney to make decisions about daily routines, medical care, moving into a care home and life-sustaining medical treatment.
Equally important is for cohabitees to consider a Property and Financial Affairs Lasting Power of Attorney to ensure that their cohabiting partner can make decisions about their money and property should they be unable to. This will allow their partner to take decisions such as paying bills, collecting pension or benefits and managing bank accounts on behalf of their partner.
Is the law going to change?
The Women and Equality Commission have recently published a Report entitled The Rights of Cohabiting Partners. They have stressed that people need certainty following the loss of a partner and they recommend that the government should immediately:
- Implement the Law Commission’s 2011 recommendations concerning intestacy and family provision claims for cohabiting partners, being that:
- couples who had lived together for 5 years (without children) or 2 years (with children) should be able to inherit under the intestacy rules; and
- A surviving cohabitee with a child should be able to make a claim under the 1975 Act, even where they lived together for less than 2 years;
- Publish clear guidelines on how pension schemes should treat surviving cohabiting partners, including what those partners are entitled to, and what evidence they will need to access survivor’s pensions
- Review the inheritance tax regime so it is the same for cohabiting partners as it currently is for married couples and civil partners.
None of this has come to force yet and whilst it’s hoped by many that the law will provide for greater rights for cohabitees, this cannot be relied upon.
A recent change that has been welcomed by many means that cohabiting parents with dependent children who need support following the death of their partner can apply for support under the Bereavement Support Payment and Widowed Parent’s Allowance. Previously support was only available to bereaved parents in a marriage or civil partnership.
Our experienced team of Family, Private Client and Estate, Trusts and Wills Disputes lawyers operate nationwide. For further advice, please get in touch.