Cohabitation - Law & Practice - An overview

01 Nov 2002

Philip Rutter, November 2002

First of all, before we even consider the issues that arise for those choosing to live together without marrying, the myth of the common law wife or husband must be dispelled. There is no such legal concept. Living with a partner for however many years (even if you have children together) does not in itself give you any legal rights. The possibility of giving cohabitees similar (but not as extensive) rights as married people has received serious consideration, but the possibility of legislation reaching the statute books is still some way off. For now we must rely mainly on land and trust law.

In the absence of a Cohabitation Agreement (see later article), if cohabitees split up, unravelling their finances may be difficult, particularly if they have lived together for some time. The law looks at what direct financial contributions have been made, for example who paid the deposit on the home, who paid the mortgage. Whilst many cohabitees will split all payments equally, it is just as common for one person to move into their partner's home. They may then start making contributions towards the household but only certain sorts of contribution can be taken into account. These include making mortgage payments and doing works to the property (but usually this has to be more than just applying a coat of paint here and there). It is not unknown for one person to pay the mortgage and their partner to pay all of the utility bills. If they then split up, the partner who has paid the utility bills suddenly finds himself or herself in the unfortunate position of not having made any contribution to the property itself; contributions to the household may not count.

If a couple have children together the principles of land and trust law do not change. However, it may be possible to bring a claim under the Children Act on behalf of the children to ensure that they are properly provided for.

For those living together, it is also important to consider what will happen upon their death. If an unmarried person dies intestate (without having made a Will) their partner may well not be entitled to anything from the estate (see later article on property ownership). If there is no Will, a claim to benefit from the estate can only be made by cohabitees under the Inheritance (Provision for Family and Dependants) Act and it can only be made if they were financially dependent on their partner. Even if they are entitled to bring a claim it will be limited to the extent to which they were dependent upon their partner and for those that have been financially independent, their claim would almost certainly fail.

It is therefore essential, when living together, to prepare a Will naming your partner as a beneficiary if you want them to benefit from your estate upon your death. If you are married, Inheritance Tax is not payable on a gift to your spouse. Cohabitees do not enjoy the same exemption as married people, although they can use their nil rate tax band (normally the first £250,000). It is therefore even more important to consider naming partners as beneficiaries under the terms of pensions, death in service policies and writing any life insurance policies in trust so that they will fall outside of the estate and will therefore not be subject to Inheritance Tax.

For further information, please contact Philip Rutter.

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