When a couple move in together two things they tend not to have at the forefront of their minds are death and separation.
This is understandable – it’s hardly very romantic to be the one to raise the subject of “what will happen if one of us dies, or if we split up?” However, taking such a rose-tinted view and failing to address the inevitable could leave both exposed to significant risks.
Cohabiting is increasingly becoming the social norm. There are at least 2.9 million unmarried cohabiting couples of the opposite sex in the UK and 12.3 million married couples – so around one fifth of couples living together are unmarried.
This article looks at some of the potential pitfalls for cohabiting couples and consider how to avoid them.
The legal position
Most people still mistakenly believe that living with someone confers legal rights after a period of time. In fact, the legal position for cohabiting couples remains far removed from that of a married couple or civil partners who have chosen to change their legal status.
On death
Where the deceased has not made a Will making provision for an unmarried cohabiting partner, there is no safety net under the intestacy rules – unmarried partners are simply not provided for and that is not set to change in the foreseeable future.
There are limited ways in which an unmarried partner can inherit if there is no Will or if a Will makes little or no provision for them. Under the Inheritance Provision for Family and Dependants Act 1975 (“the 75 Act”) a claim can be made for reasonable financial provision:
- as a dependant if they were being maintained at least partially by their partner before they died; and/or
- as a cohabitant provided they have lived in the same household as the spouse or civil partner of the deceased for a continuous period of two years immediately prior to death.
They will not be entitled to the same sort of level of provision as a spouse would be (i.e. the equivalent of the provision that would be made on divorce) – the award is simply what is reasonable in all the circumstances and is described as being for their “maintenance” – there is no concept of a fair share.
If they have bought the property together and it is in joint names the default position is that they hold it as joint tenants. This means that if one of them dies the other will benefit from the automatic right of survivorship and receive the deceased’s share of the property.
Frequently, couples do not address how the property is held, even where they have contributed to it unequally (and it is not uncommon for conveyancers to fail to flag up the issue), so a survivor who has paid little or nothing towards a property may end up as sole owner. But this will only assist a cohabitant whose name is on the title where the joint tenancy has not been severed.
Take avoiding action
So while the law remains as it is, unromantic as it may seem, prevention is undoubtedly better than the cure. Even if there may be a possible remedy such as a claim as a dependent under the 75 Act, it is clearly preferable if the cost and stress of legal proceedings can be avoided.
The benefit is not just for the surviving partner. Failure by the deceased to make arrangements which include appropriate provision for a partner means that they no longer control what happens to their own estate. The door is open for a 75 Act claim which if successful will deplete the estate further because it will have to bear the significant legal costs on both sides.
A cohabitation agreement in the form of a deed is legally binding and can deal with as much or little detail as the couple feel inclined. From the basic division of the equity in the home to who will pay which bills and own which chattels.
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Doing the following could save money and heartache
- Consider how property is going to be held and how you would want it to be treated if you separate or die:
a. Who is on the legal title?
b. Should there be a declaration of trust to reflect an equity split which differs from the legal position?
c. Who is responsible for the mortgage?
d. Who will pay for repairs and improvements?
- Consider a cohabitation agreement.
- Discuss making a Will and make sure you both do so. You may wish to make mutual Wills.
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A Will should specifically address what happens to a property you jointly own or live in if one of you dies. It is worth talking to a specialist and considering the full range of options – for example you could preserve the equity in your property so that it ultimately passes to your children but still avoid hardship to a partner by carving out a life interest for them.
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Don’t do one thing in isolation of another – make sure your Will, any declaration of trust and cohabitation agreement complement each other rather than conflict.
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Make sure your cohabitation agreement stays relevant – consider contingencies if you have children or if your circumstances change and think about whether to build in a review clause.
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Also keep your Will up to date so that the people you want to benefit do so. Remember, separation from someone with whom you cohabit does not invalidate a Will.
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