Cohabitation Reform May Be Coming, But “Common, Law Marriage” Still Does Not Exist
More than 3.5 million couples in England and Wales now live together without being married or in a civil partnership.
Yet many still believe that living together for long enough creates the legal status of a “common-law spouse”.
It does not.
A recent government consultation on reforming protections for cohabitants has proposed stronger financial rights for qualifying cohabitants, potentially including financial remedies following separation and automatic inheritance rights where a partner dies without a Will.
For the proposed separation framework, a three-year qualifying period for couples without children has also attracted debate.
These reforms could provide a valuable safety net. However, as highlighted by Today’s Family Lawyer, the proposals remain just that: proposals.
The law has not yet changed, and there is no guarantee that the eventual legislation will look the same — or arrive quickly.
What Are the Current Rights of Cohabiting Couples?
An unmarried partner does not automatically inherit under the intestacy rules simply because the couple lived together, shared bills or regarded themselves as husband and wife.
Depending on the circumstances, a surviving partner may be able to bring a claim against the estate.
But a court claim after death is not an estate plan.
It can be expensive, uncertain and deeply damaging to family relationships.
Cohabiting Couples and Inheritance Tax
Inheritance Tax creates another important distinction.
Transfers between spouses and civil partners are generally exempt, but that exemption does not automatically extend to unmarried partners.
GOV.UK confirms that a home can pass to a husband, wife or civil partner without Inheritance Tax; an unmarried partner does not receive the same blanket protection.
This can leave the survivor facing an unexpected tax liability at precisely the moment they are dealing with bereavement.
Property Ownership Can Also Cause Problems
Property ownership can also cause difficulty.
The outcome may depend on whether a home is held as joint tenants or tenants in common, who contributed what, and whether any declaration of trust or cohabitation agreement exists.
This is why a Will should not be considered in isolation from the way property and other assets are legally owned.
Living Together Does Not Give Automatic Authority if a Partner Loses Capacity
Then there is incapacity.
Living together does not automatically give one partner authority to manage the other’s finances or make health and welfare decisions.
Those powers normally require properly registered Lasting Powers of Attorney.
For cohabiting couples, this can be particularly important because there is no automatic legal authority simply because two people have lived together for many years.
Planning Should Not Wait for Parliament
Cohabiting couples should consider:
making coordinated Wills;
reviewing how their home and other assets are legally owned;
preparing Lasting Powers of Attorney;
checking pension and death-benefit nominations;
reviewing whether life policies should be written into trust;
considering a cohabitation agreement; and
obtaining proper Inheritance Tax and trust-planning advice where appropriate.
These documents must work together.
A Will that conflicts with the ownership of the home, an outdated pension nomination or a life policy left outside trust can produce a very different result from the one the couple intended.
The iTrust View
We welcome reform that recognises how modern families actually live.
No one should lose their home or face unnecessary financial hardship because they mistakenly believed that “common-law marriage” protected them.
However, a proposed statutory safety net is not a substitute for personal estate planning.
Even if reform is introduced, it is unlikely to deal comprehensively with every couple’s property, tax, inheritance, incapacity and family circumstances.
Nor should families willingly leave these decisions to intestacy rules or, worse still, to litigation after death.
The law may eventually offer cohabiting couples greater protection.
Until it does — and even after it does — the safest approach is to put clear, coordinated arrangements in place.
Your relationship may be built on trust. Your estate plan should be built on documents.
Frequently Asked Questions
Does common-law marriage exist in England and Wales?
No. “Common-law marriage” does not give cohabiting couples the same legal status as marriage or civil partnership in England and Wales, regardless of how long they have lived together.
Living together for many years does not automatically give one partner the inheritance, tax or decision-making rights that can arise through marriage or civil partnership.
Can an unmarried partner inherit if there is no Will?
An unmarried partner does not automatically inherit under the intestacy rules in England and Wales simply because they lived with the person who died.
Depending on the circumstances, a surviving cohabiting partner may be able to bring a claim against the estate. However, making a claim after death is very different from having clear inheritance arrangements already established.
A properly prepared Will can therefore be particularly important for cohabiting and unmarried couples who want to decide what should happen to their estate.
Do unmarried couples pay Inheritance Tax when one partner dies?
Unmarried couples do not receive the same automatic spouse or civil partner exemption from Inheritance Tax.
Marriage and civil partnership can allow qualifying assets to pass between spouses or civil partners without Inheritance Tax. Simply living together does not create the same exemption.
A Will can determine who inherits an estate, but it does not change the beneficiary's tax status. Cohabiting couples should therefore consider Inheritance Tax as part of their wider estate planning rather than assuming that leaving everything to each other in a Will produces the same tax treatment as marriage.
Does owning a house jointly protect an unmarried partner?
Joint ownership can affect what happens to a property when one owner dies, but it does not by itself give an unmarried couple all the rights available to spouses or civil partners.
The outcome can depend on how the property is owned, including whether it is held as joint tenants or tenants in common, as well as any relevant declaration of trust, Will or other arrangements.
Property ownership should therefore be reviewed alongside Wills, trusts and the rest of the couple's estate plan.
Does my partner automatically make decisions for me if I lose mental capacity?
No. Being married or living together does not automatically give someone unrestricted authority to manage another person's finances or make health and welfare decisions if they lose mental capacity.
A Lasting Power of Attorney allows you to choose who should have authority to make appropriate decisions on your behalf.
There are separate LPAs for property and financial affairs and for health and welfare. They form an important part of estate planning because a Will only deals with what happens after death, whereas an LPA can provide continuity during your lifetime.
What estate planning should unmarried and cohabiting couples consider?
There is no single document that deals with every issue a cohabiting couple may face.
Depending on their circumstances, estate planning for unmarried couples may include:
coordinated Wills;
Lasting Powers of Attorney;
reviewing ownership of the family home and other assets;
pension and death-benefit nominations;
life assurance arrangements;
trusts where appropriate;
Inheritance Tax planning; and
reviewing arrangements when family or financial circumstances change.
The important point is that these arrangements should work together. A Will, trust, LPA, property arrangement and life assurance policy all perform different jobs within the wider estate plan.
Are cohabitation laws changing in England and Wales?
The Government has consulted on proposals to strengthen legal protections for cohabiting couples, including potential changes affecting financial claims following separation and inheritance where a partner dies without a Will.
However, the consultation does not itself change the law. Until legislation is introduced and comes into force, cohabiting couples should plan on the basis of the law that applies today.
Even if greater statutory protections are introduced, individual estate planning may still be important because every couple's property, tax, inheritance and family circumstances are different.
Should cohabiting couples make a Will even if the law changes?
Yes, in many cases a Will will remain an important part of estate planning even if cohabitation reform introduces greater protection for unmarried partners.
Statutory rules provide a default position. A Will allows someone to record their own wishes about who should inherit their estate.
For cohabiting couples, the Will should also be considered alongside property ownership, Lasting Powers of Attorney, pensions, life assurance and trust planning where appropriate.
What is the biggest estate-planning risk for unmarried couples?
One of the biggest risks is assuming that living together creates rights that do not actually exist.
A couple may regard themselves as one financial household while the law treats their property, inheritance rights, tax position and decision-making authority very differently from those of a married couple or civil partners.
Good estate planning establishes clearly who should benefit, who can act if someone loses capacity and how the different parts of the couple's financial affairs should work together.
James Berkeley
Senior Counsel
iTrust121 Ltd