New research from family law group Resolution has revealed that the millions of unmarried couples who live together could be unaware of their rights.
As the number of cohabiting couples has more than doubled from 1.5 million in 1996 to a staggering 3.3 million in 2017, alarm bells should be ringing.
Of the 2,000 UK adults surveyed, 281 were in a cohabiting relationship and two-thirds of those mistakenly believed “common-law marriage” law exists to protect their finances in the event of a break-up.
On the contrary. Under current law, you can live with someone for decades, and even have children together, but take no responsibility for a former partner if the relationship breaks down.
Resolution is calling on the government to consider reform to provide basic rights to cohabiting couples should they separate. But is it really the government’s responsibility? Couples often choose to live together without marrying because they don’t want the restrictions that marriage can bring but it could be argued that they shouldn’t have the benefits either.
Whichever way you look at it, the government certainly has a duty to make sure people at least know the difference between cohabitation and marriage and understand their rights.
So if you’re living with your partner but have no plans to tie the knot, what should you do to make sure you don’t suffer financially?
Make an agreement now in case there’s a disagreement later
Consider drawing up a Cohabitation Agreement. You can use this to formally set out what each partner has contributed to the household finances, and how assets would be divided if you decide to separate.
Perhaps you live in a property that your partner owns but you contribute to the mortgage repayments. With a Cohabitation Agreement in place, you can make sure you have the right to your share of the property if the relationship turns sour.
Show will-ing to prepare for the future
Whereas a married partner would automatically inherit all or some of the estate if their spouse died, this is not the case for a cohabiting partner. Unless of course, their partner had made a Will.
If you cohabit, you don’t automatically inherit your partner’s estate if they pass away, making it even more imperative that you have Wills in place.
Without a Will, the estate will be subject to the rules of intestacy, which determine how the deceased’s assets are divided.
Watch out for IHT
Usually, you won’t have to pay inheritance tax (IHT) if the value of your estate is below the £325,000 threshold.
But while married couples (or those in civil partnerships) can merge their tax-free allowances so that the surviving spouse doesn’t have to foot a huge IHT bill, this isn’t the case for those who haven’t married.
Unmarried couples need to be careful with this tax position and seek legal advice to reduce the risk of assets being taxed twice.
Of course, all of the above is subject to change, particularly as the Cohabitation Rights Bill is currently being debated in parliament. But if you’re a cohabiting couple now and you have no intention of getting married, do make sure you take the necessary steps to ensure protection in the unfortunate event that it’s needed in the future.
Parfitt Cresswell is a member of Resolution, the national organisation for family lawyers. To speak to one of our family law experts about your personal circumstances, call 0800 999 4437 or email firstname.lastname@example.org
Cohabitation Awareness Week (27 November to 3 December 2017) is organised by Resolution and aims to raise awareness of the lack of rights for unmarried couples in the UK and highlight the way couples can protect themselves.