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Cohabiting couples lack of rights cause for concern

1 September 2019

Office for National Statistics (ONS) show that 3.4 million people now cohabit – around 1 in 8 people aged 16 or over.

The data also shows that half of cohabiting couples own property and nearly half have financial assets including cash, shares and trade investments. Around 53% have assets worth £100,000 – while 15% have up to £500,000. More than half also own financial and property assets between them – which are now co-owned.

Weighted by financial commitments to each other, many incorrectly believe that co-owning, cohabiting means far more than it actually does in terms of their individual rights.

Also, while they will live together and often raise families together like their married counterparts, they don’t have the same rights when it comes to things like pensions.

Notably, many assume that if they co-own a property, on death of one partner the house would pass to the survivor, likewise that they would inherit the entirety of their estate or assume executor status

Dan Garrett, CEO and co-founder of Farewill, highlights four key points of which cohabiting couples need to be aware:

1. If one cohabiting partner dies without leaving a will, the surviving partner won’t automatically inherit anything. This includes any share of the house, unless the couple jointly own property as a “joint tenant” (not “tenants in common”). A married partner would inherit all or some of the estate.

2. Cohabiting partners cannot access their partner’s bank account if they die, unless they’ve been named specifically as a beneficiary in their will, whereas married couples may be allowed to withdraw the balance providing the amount is small.

3. An unmarried partner who stays at home to care for children can’t make any claims in their own right for property, maintenance or pension-sharing.

4. An unmarried partner of a tenant has no rights to stay in the accommodation if they are asked to leave – but each married partner has the right to live in the “matrimonial home”.

Garrett  said: “There’s a huge myth that, when you die, the person who you’re in a long-term relationship with, or even own a house with, will automatically inherit your estate. “Unfortunately, this simply isn’t true. In the UK, the law only applies this type of automatic protection to married couples or those in a civil partnership.

“Being together for a long time doesn’t count, and means, legally speaking, you and your partner are entitled to nothing.

“For cohabiting couples, this is a particularly important issue. Millions of unmarried couples in the UK who have no protection, potentially stand to lose everything, unless they and their partner outline their wishes in a will.

“Without a will, the estate will often go to a parent or parent in law.

“The law as it stands isn’t set up for the modern family, so it’s important to take what you want to happen after you die into your own hands by making a will.”

Helen Morrissey, pension specialist at Royal London, pointed out that the death of a partner or the end of the relationship “can leave people at very real financial risk”.

She added: “While there are moves to let mixed sex couples enter civil partnerships we need greater awareness of the need for cohabiting couples to plan their finances to mitigate against financial shocks.”

Professional Paraplanner