What protection do you have and what protection can you expect in future?
Recent figures published by the Office of National Statistics show that “the population aged 16 or over who were “cohabiting, never married or civil partnered” increased from 6.8% in 2002 to 9.5% in 2015”.
Why have levels of cohabitation increased?
In England and Wales there is still a misconception that a so-called “common law marriage” exists i.e. that if you cohabit with your partner then you have similar legal rights and protection afforded to married couples.
As couples choose to marry later or not at all, they are cohabiting for longer. This can be attributed to societal trends and high divorce rates.
What rights do cohabitees have?
In England and Wales cohabiting couples are afforded very limited legal protection:
Cohabiting couples do not have a legal duty to support each other financially, particularly if they separate.
Unlike in marriage, cohabiting partners are not automatically entitled to an interest or right to the property shared during the relationship. You may be able to claim an interest in the property if you have contributed financially i.e. if you have contributed to the mortgage or deposit.
Death and inheritance tax
Cohabiting partners have no automatic right to inherit from their partner’s estate if they die though it may be that you are a beneficiary on your partners will. In this instance there is no exemption for inheritance tax for unmarried couples.
What is the Government doing about it?
Unfortunately, the law has yet to change to reflect modern society.
Lord Marks of Henley-on-Thames introduced the Cohabitation Rights Bill on 4 June 2015.
The bill aims to create a framework of rights and responsibilities with a view to providing basic protection for cohabitants. It proposes to protect cohabitees who have cohabited for three years or more. In short, on separation couples that fit the criteria will be able to apply for a financial settlement order and the court will be able to make an order if the applicant can show that he/she has suffered an economic disadvantage and their partner has retained a benefit as a result of “qualifying contributions” the applicant has made. These contributions are not just financial and include “other contributions”. The court will consider the following factors:
The court will be able to make the following orders:
There is no respective provision for what is known as ‘spousal maintenance’ for married couples, i.e. continued financial support to an ex-husband or wife through regular, generally monthly, payments.
What needs to happen next?
The bill has now had its second reading in the House of Lords and is at the committee stage. This means members of the House of Lords will scrutinise the bill line by line and make any amendments before it goes to the report stage for further scrutiny. There are still a number of hurdles to cross before the bill becomes law.
What are the possible implications of Brexit?
In London there are more than 100,000 officially recorded couples where one British national is in a relationship with someone of EU nationality (according to the Office of National Statistics 2016). To prevent residency issues for couples where one partner is from an EU country, we may see an increase in marriage in London and throughout England and Wales.
‘Brexit’ may also take priority and slow down the passing of the Cohabitation Rights Bill.
What can you do in the meantime?
Until The Cohabitation Rights Bill is passed in England and Wales there are a few options available to cohabitees:
This sets out ownership of assets and financial agreements in the event of separation. Although not all of the agreement may be legally enforceable, having an agreement in place will reduce the likelihood of disputes in future as well as make any disputes easier to resolve.
Declaration of Trust
A Declaration of Trust sets out your respective shares in a property and how the shares will be distributed in the event of the sale of the property.
You can set out in a will provisions for your partner in the event of your death. You can also make provisions for possible tax implications.
If you have any questions on any of these topics, please contact a member of our family team.