Cohabitees: planning for the future

Cohabitees
Cohabiting couple families are the second-largest family type in the UK at 3.5 million (18.4%), according to the ONS. But despite this, the law of inheritance does not make adequate provision for them.

The proportion of families containing a cohabiting couple increased from 15.3% to 18.4%, reflecting the declining trend seen in the proportion of the population who are married and an increasing trend in the proportion cohabiting. Yet some areas of law still fail to accommodate cohabitees – succession being one of them.

Cohabiting couples

Above: Despite the fact that cohabiting couples make up a substantial part of the UK population, English law continues to view cohabitation as ‘fundamentally different to that of a married or civil partnership couple’. [1]

Failure to provide adequately for a cohabitee may result in the necessity of an Inheritance Act claim, given the lack of provision under intestacy rules. Such claims can take considerable time and expense with no guarantee of the outcome. Cohabitees should therefore consider making provision for each other in a Will. The arrangements should be appropriate to the couple’s financial circumstances and do not necessarily have to be financial, per Lewis v Warner.[2]

In addition to making a Will, there are other areas to consider. First, they may also benefit from estate planning as they do not enjoy the married couple’s exemption. A large inheritance tax bill burdening the survivor may make an Inheritance Tax claim necessary.

Second, a review of their property ownership and consideration of a cohabitation agreement, declaration of trust or both may also be advisable (such agreements are recognised by the courts in principle[3] and provided they are prepared by a lawyer and each party receives independent advice, they rebut the presumption in domestic circumstances that the parties do not intend to enter into a contract).[4] This step clarifies the legal responsibilities of each party and may assist a survivor in asserting their rights and defending claims from family members in the future.

Cohabitees with children from former relationships should be advised that the courts may award the survivor a life interest in the family home rather than an outright sum. Although preserving the value of the estate, it could mean that their own children will not inherit until later in life, perhaps well after it is needed. Providing for those children in some other respect (such as through life assurance) could avoid disappointment, disharmony and a claim.

Finally, cohabitees should each make Lasting Power of Attorneys covering both health and financial decisions. Regarding finances, if one loses capacity, the other may find themselves without access to either the incapacitated person’s accounts or joint bank accounts (the latter of which may be frozen) without obtaining a Deputyship Order which can take considerable time. Further, if a member of the incapacitated person’s family decides they want to be Deputy, a lot of stress, disagreement and heartache can follow.

Regarding healthcare decisions, tensions can arise if there is a disagreement over the incapacitated person’s care. Further, whilst hospitals usually accept your partner as the next of kin, there is little that can be done if they do not. Making both types of Lasting Power of Attorney nominating your cohabitee as your Attorney and setting out your instructions and wishes in advance can save a lot of time, stress and conflict. These must, of course, be made whilst you are both in good health.

Q: I’m getting married soon – shall I wait to make my Will?

A: No – given how little protection is afforded to cohabiting couples, don’t wait to make your Will (or Lasting Powers of Attorney, for that matter).

Although marriage normally cancels any Will you’ve made before, this doesn’t apply where the Will has been made ‘in contemplation of marriage’. The Will needs to state specifically who you are marrying – for example,

I am expecting to marry John Smith. My marriage to him does not revoke this will. This will is effective even if I die before marrying.”

The same applies to a civil partnership.

Find out more:

Sources:

[1] Burden v United Kingdom (13378/05) [2008] S.T.C. 1305 at [65]
[2] Lewis v Warner [2017] EWCA Civ 2182.
[3] Sutton v Mischon De Reya and Gower & Co [2003] EWHC 3166 (Ch), [2004] 1 FLR 837.
[4] Balfour v Balfour [1919] 2 KB 571; Merritt v Merritt [1970] 1 WLR 1121.
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