Co-habiting couples – are you protected?

Posted on: February 7th, 2018

Lindsay Taylor, a Solicitor in the Wills, Trusts and Probate team in Southampton, takes a look at the Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill which received its unopposed Second Reading in the House of Commons on 2nd February.

The Bill
Eagle-eyed viewers may have noticed that the Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill received its unopposed Second Reading in the House of Commons on 2nd February 2018.  This private members bill proposed by Conservative MP Tim Loughton (and supported by both the Government and the Labour Party) is intended to address the “glaring inequality” that currently exists.  If the bill receives Royal Assent, it will allow couples to register an opposite sex partnership in the same way that same sex couples can register their union under the Civil Partnership Act 2004.

Fight for Equality
Rebecca Steinfield and Charles Keidan, from London tried to form a civil partnership in 2014.  When they were told they did not meet one of the basic legal requirements of registering a civil partnership (being of the same sex) they took their case to the High Court claiming discrimination.  Same sex couples now have the choice of civil partnership and marriage and they wanted the equal right.  The Civil Partnerships, Marriages and Deaths (Registration Etc.) Bill seeks to rectify this unfairness and unintentional discrimination that has arisen in our legal system.

It might seem strange that Ms Steinfield and Mr Keridan are insistent on a civil partnership when it is possible to be married at a registry office if they wish to avoid the frills and expense of a church wedding.  Their argument is that they wish to make their union formal in a way that is unconnected with religion (as marriage usually is).  They have a personal objection to marriage as an institution and its associations with property rights and historical patriarchy.  Most of all, they want legal recognition of their committed relationship on their terms – a right which is already enjoyed by couples of the same sex.

The risk
It is the legal recognition that most interests me.  Whether or not this bill becomes law, it is clear from talking to unmarried clients (same and opposite sex) that many are still unclear of their rights (or lack of them).  The myth of ‘common law spouses’ persists and I often hear that clients assume their estate will pass to their other half just by virtue of them having lived together for a number of years.  A couple that have been married as long as it takes the ink to dry on the certificate have more legal and financial rights than a couple that have been together ‘as man and wife in all but name’ for years. 

Without a will, the estate of one half of the couple will not pass automatically to the partner, but via the laws of intestacy.  This could mean that children or more distant family of the deceased person will inherit a share in a property, bank accounts or investments.  Assets held jointly may pass direct to the co-owner and can include the ownership of a property, but this is not always the case and may not have been intended by the person who has died in any event.  The survivor of a cohabiting couple will have little or no rights of access to pension should one of them die.  Their estates will have no access to the transferrable nil rate band (currently worth £325,000 in inheritance tax relief) and the transferrable residential nil rate band (worth £100,000 in inheritance tax relief at the time of writing and due to increase).  There is no right to tax free transfers between the couple – both under inheritance tax and capital gains tax rules.  Yet if they simply exchange rings and vows, these become available.  I have had many clients tell me that they consider marriage so alien or conversely, so important to them that ‘mere tax relief’ is not the right reason to enter into such a binding relationship.

I have waxed long on the dangers of not setting your affairs in order on death, but there is also a risk of adverse consequences if you or your partner become unwell and your personal and financial affairs need to be managed.  I have dealt with a heart-breaking case where such a client had no interest in his partner’s property.  She became incapable of handling her own affairs and the attorneys sold the property, his home.  As the lady was still alive, he was financially exposed with no rights. As he was not married to the lady, the property was part of the lady’s estate for assessment purposes and not protected from being sold.  He had no right to be involved with the matter as he was not a family member or appointed attorney. He was financially exposed with no rights. 

Don’t despair; it is possible to deal with these problems now without waiting on the whim of Parliament.

The solution
Whether or not the bill is passed and indeed, whether or not you wish to formalise your relationship, it is possible to make arrangements now to ensure that your family is cared for after your death or if you become incapable of making decisions during your lifetime.  A will, power of attorney and particularly in the context of a property, a declaration of trust will all enable you to determine how your assets are to be dealt with during your lifetime as well as after you have died.