Continuing the call for certainty for unmarried cohabiting couples

The cohabiting family is the second largest family type in the UK, representing 3.3 million families, and growing.  But this popular form of family type suffers from a legislative gap in the UK compared with those who are married or in a civil partnership, meaning that those who cohabit lack certainty on their position in the event of a relationship breakdown or the death of their partner.

Statistics reveal that the majority of cohabiting couples are unaware of this uncertainty. Two thirds of people who are cohabiting believe the ‘common law marriage myth’, that is, if they are together long enough, they will be treated as if they were married by law. Devastating problems can ensue when cohabiting couples separate or when one of them dies without making provision for the other.

It has been over 10 years since The Law Commission produced its report on the unsatisfactory treatment of cohabitation in UK law in 2007, but the government has not designated it as an area for legal reform. The report recommends a straightforward financial relief scheme for those who meet the requirements, namely that they have been together for at least 2 years before death or have a child/children together.

The most significant and progressive changes in law have come from the Courts. The Re McLaughlin [2016]   case involved a successful claim by Siobhan McLaughlin for Widowed Parent’s Allowance (WPA), a lady who lost her partner who she had lived as husband and wife with for 23 years, and had 4 children together.  She succeeded in her claim that the law discriminates unfairly against bereaved cohabitants.

Potential problems for cohabitants on the death of their partner

1. Lack of provision in the deceased’s partner’s Will: If a partner dies intestate (that is, without having written a Will) and having made no provision for their cohabiting partner, the surviving partner would have no automatic right under the intestacy rules to the deceased partner’s assets. For some the only way to access their partner’s assets would be through bringing a claim under the Inheritance (Provision for Family and Dependents) Act 1975. And in the worst case scenario, the surviving partner may need to bring a claim against their own child who may have an automatic right to inherit.
2. Bank accounts in sole name: If bank accounts are held in the sole name of the deceased partner, again the surviving partner has no automatic right to inherit anything in the accounts. The situation is different if the couple were married or in a civil partnership, and held the account jointly. In this situation, on the death of one of the couple, the account would automatically go into the name of the surviving partner.
3. Inheritance Tax: Married couples/those in civil partnerships are able to benefit from the transferable nil rate band, whereas cohabiting couples cannot. As a result, they face higher inheritance tax bills.
4. Lifetime gifts: Gifts made during a married couple’s/those in civil partnership’s lifetime to their spouse are exempt for IHT purposes. This is not the case with cohabitating couples, as if they make a gift to each other during the 7 years before their death it can become taxable.

How cohabitants can protect themselves

1. Enter into a cohabitation agreement which makes clear, bespoke arrangements for the parties’ assets and income during their relationship and in the event of separation. Clear financial arrangements can be set out for the couple’s children also.
2. Have a Declaration of Trust drawn up, clearly outlining how the property is owned. This can be a part of the cohabitation agreement.
3. Ensure you have made a valid Will making provision for your cohabiting partner and children. Our Wills Team in Blake Morgan are highly experienced in making watertight Wills for those who wish to provide for their partners and would be happy to assist you with this.

It is understandable why the government would not want to undermine the institution of marriage, however the number of people who co-habit and suffer from the lack of legal protection cannot be ignored. . There is a clear need for UK law to recognise cohabitation as a legitimate family status, and provide them with certainty over their future if their partner is no longer around.