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Co-habitants: action required

When advising an unmarried couple on their finances, arguably the most important advice that can be given is to draw up a Will.

In this article we look at a case concerning an outdated Will, consider what help might be forthcoming from statutory intervention and recommend action that should be taken by co-habitants.

Co-habitants, whether a same-sex couple or an opposite sex couple, should be advised that, contrary to popular myth, common law marriage is not a legal concept and that, unlike marriage, co-habitation confers very few legal rights or obligations on either partner. Government statistics show that in 2022 3.6 million families were headed by an unmarried couple, an increase of nearly 23% over a decade, so potentially, a significant number of people need to take action to ensure that difficulties do not arise on the death of their partner.

The cost of not having a Will

This was illustrated by a case reported in the press and heard in the London County Court. The case concerned the late Norman Martin and his partner of 18 years, Joy Williams. Norman and Joy owned a home together as tenants in common. Norman had made a Will but had not updated it following his separation from his wife. Consequently, on Norman’s death his share of the house passed under his Will to his estranged wife, and not to Joy.

Joy took court action which was successful. Norman’s share of the house was awarded to her and a substantial costs order was made against Norman’s estranged wife.

As there is no official case report we do not know on what basis this judgment was made. Joy might have brought an action against the estate under the Inheritance (Provision for Family and Dependents) Act 1975 (which enables a co-habitant of at least two full years, or an individual who had been maintained by the deceased immediately before his death, to claim against an estate from which he or she has not received reasonable financial provision). Alternatively, she may have claimed a beneficial interest in Norman’s share of the house. Whatever the basis of Joy’s claim, the court process and its costs could have been avoided if Norman had made a new Will.

A Will is particularly important in these circumstances given that a co-habitant has no rights under the intestacy laws against their partner’s estate if he or she dies without making a Will.

Future help from statute?

It does not appear likely that any change to the present law will happen quickly. In 2011 the Law Commission published a report recommending that in certain circumstances co-habitants should have automatic rights to share in their partner’s estate if the partner died intestate, rather than having to claim against the estate. However, in over a decade this has not been implemented.

What action should co-habitants take?

Since cohabitants have no entitlement to each other’s estates under the intestacy rules, it is particularly important that they should make a Will. In addition, when partners move in together they might consider entering into an agreement setting out what is to happen in the event of a relationship breakdown, although the enforceability of such agreements has yet to be tested before the courts. If a property is purchased then it would be advisable to consider entering into a declaration of trust recording each person’s contribution to the purchase, setting out any agreement about payment of the mortgage and any other outgoings, and stating what happens in the event of one person wanting to sell.

It should be remembered too that co-habitants do not enjoy any of the tax advantages that attach to marriage such as exemption from inheritance tax. Although co-habitants will be entitled to the inheritance tax nil rate band, and the residence nil rate band  if they leave a property to their children, these allowances are not transferable between co-habitants. This means that particular planning may be necessary for unmarried couples such as ensuring that the nil rate band is used on both deaths, perhaps through the medium of a discretionary trust so that the survivor can potentially benefit.

The costs award against Norman Martin’s estranged wife was reportedly in the region of £100,000. When such sums are at stake co-habitants should be advised to take action with regard to their estates (and particularly to make Wills) as a matter of priority.

For more information, please call us on 0800 915 7732.

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