The Myths and Misunderstandings of Co-habiting Couples
Recent research carried out by the insurance company Direct Line shows that 38% of cohabiting couples living in the UK are unsure what they are legally entitled to if their partner died without leaving a Will. One in ten cohabiting couples wrongly believe that they would automatically inherit their partner’s share of any property they lived in together.
However, this is not necessarily the case. A surviving partner will only inherit property if they own the property jointly as Joint Tenants (in which case it passes to the survivor regardless of any Will), or if the partner owned the property and they specified that the property should pass to the survivor in their Will. To describe this as a shock for the survivor, when they are having to deal with everything that follows a close bereavement, is a massive understatement. This can be made all the more tragic if there are other family dynamics at play. As the old adage can be reconstructed to say ‘where there’s NO Will, there’s a relative!’.
Throughout the past year, the Covid pandemic has focused many people’s minds on their own mortality and, across the legal profession, there has been an increase in instructions for Wills and Lasting Powers of Attorney. However, despite this there is still a chasm with co-habiting couples who have made a will being substantially less than those who are married or in a civil partnership. More than half of married couples living in the UK have written a will, whereas amongst co-habiting couples the figure is only 26%.
In 1996 there were 1.45 million cohabiting couples in the UK, but by 2016 the number had increased to 3.3 million and this is expected to continue increasing. Despite this trend, the law is still very much geared towards married couples. The term Common Law Wife/Husband/Partner has no legal status and purely means you are living together. If a partner dies, unless they are married or in civil partnership, the surviving partner has no right to inherit anything unless provision has been made in the deceased’s Will.
So, what does this mean in practice? Assets held jointly (as joint tenants) will usually pass to the surviving partner. So, for example, unmarried couples might have a joint bank account where either can sign cheques and payments and if one partner dies, the account automatically passes to the surviving partner. A property or other asset and investments owned jointly (as joint tenants will also automatically pass to the survivor). The deceased’s share of assets will still be assessed as part of their estate for probate and Inheritance tax. Consideration should also be given to who is nominated as the beneficiary of your pension or recipient of any life assurance.
Many co-habiting couples may have children from previous relationships and may also have children together. Whilst they would probably wish to ensure their partner was provided for when they die, many also want to ensure their share will pass to their children when their partner dies. Not having a Will ensures your partner is NOT provided for on your death (the flowchart below shows which of your relatives would share your estate rather than your partner, if you die without a Will). This can mean legal action is the only option for the partner to claim under the Inheritance (Provision for Family and Dependants) Act 1975, in respect of assets they may have considered joint in all but name. Equally, if there is a Will, it is important to take advice over the protection the Will provides for children. All bets can be off if you leave everything to the surviving partner, trusting they will see your children right after your death. The message must be that if you are in a relationship, but are not married, you should take steps to ensure your partner is provided for on your death as well as protecting your children, if you have any. This involves both of you writing Wills, and may also involve putting other measures in place such as Trusts. To consider this further, please give me, Andy Pearson a call on 07967 426546 for an initial chat.
Dynamic Estate Planning
16 Dimple Park, Egerton,
Bolton BL7 9QE,
Contact: Andrew Pearson
Dynamic Estate Planning