A recent study by Will Aid, the UK national Will-writing campaign, has highlighted a lack of awareness among cohabiting couples regarding inheritance laws. According to the survey, 68% of individuals living with their partners do not understand the rules of intestacy or the consequences for their estate should they die without a Will in place.
The survey also revealed that 32% of respondents incorrectly assumed that their estate, including their share of any property, would automatically transfer to their partner upon their death and 11% of those polled admitted they had not considered the matter at all.
Further, a survey carried out by the Women & Equalities Committee in 2022 found that 46% of respondents believed that there was a concept of "common law marriage" in English law – that is to say, after living together for a certain period of time, a cohabiting couple gains rights equivalent to those of a married couple. This is not the case; there is no ability to make a claim for financial provision against an unmarried partner on breakdown of the relationship unless via a claim over property (ie a contribution to a shared home) or by virtue of having a child together (which gives rise to a 'Schedule 1' claim).
Where an unmarried couple separates, whether as a result of the death of a partner or if a decision to separate is made during lifetime, there can be unintended and unknown consequences. This article considers cohabitation agreements and how these can be used to protect cohabiting couples. It also explores the intestacy rules and highlights the potential impact on couples who live together without having a valid Will in place
Cohabitation agreements
In England and Wales, the rights afforded to married couples are superior to the rights afforded to cohabitants, and there are limited legal safeguards for unmarried cohabiting couples who have not entered into an express declaration of trust or cohabitation agreement. Whereas marriage represents a more permanent recognition of the financial interrelationship between the parties, cohabiting couples have no ability to make a financial claim against their ex-partner on separation during lifetime, unless they can demonstrate that they made a financial contribution to property.
As such, cohabiting couples should consider entering into a cohabitation agreement. In the absence of a cohabitation agreement, at least one of the parties (if not both of them) could be vulnerable on separation. For example, if one party owns property in their sole name, they may be vulnerable to a legal claim by their partner for a share in the property if their partner has contributed to the mortgage (or renovations). A cohabitation agreement is a legal document that outlines the intentions of both parties regarding property and financial arrangements between them, both during cohabitation and also in the event of relationship breakdown or death of one of the parties.
Cohabitation agreements can cover the following:
How the mortgage and other household expenses shall be paid (by whom and in what proportions);
- What should happen in the event that one party wants to sell and the other does not;
- The arrangements for one party to buy out the other;
- Ownership of joint and individually owned property;
- Financial support between cohabitees if the cohabitation ends;
- The living arrangements and financial support to be given to the parties' children, if cohabitation ends.
They can also record that, in the event of relationship breakdown, the financially weaker party shall have income provision akin to spousal and child periodical payments. If such a clause was included in a cohabitation agreement, this would provide good contextual evidence for a claimant under the Inheritance (Provision for Family and Dependants) 1975 Act maintaining that the deceased's intention was to maintain them / their children in the event of separation or death.
Cohabitation agreements will be enforceable provided they have been negotiated with the benefit of legal advice, are executed as deeds and are fair. It is also advisable that the agreement be negotiated and signed in advance of the parties moving in together or crucially, not at a time where one of the parties could later argue they were in a vulnerable relationship.
In addition to entering into a cohabitation agreement (and declaration of trust, if appropriate) cohabiting couples should also consider putting in place a Will, to overcome the challenges that may arise if one party dies intestate.
Dying intestate
When a person dies without a valid Will in England and Wales (referred to as dying 'intestate'), their estate is distributed according to the rules of intestacy. While these rules provide a clear framework for the distribution of assets, they can have unintended and often negative consequences, particularly for cohabiting couples.
The intestacy rules dictate that the distribution of a person's estate follows a specific order and the rules prioritise blood relatives and legally recognised partners, such as spouses or civil partners, over other categories of beneficiaries. The order of priority for the distribution of a person's estate under the intestacy rules is:
- Spouse or civil partner: If the deceased is survived by a spouse or civil partner, they will inherit the majority, if not all, of the estate. This includes personal possessions, the first £322,000 of the estate (known as the statutory legacy) and half of the remaining estate if there are also surviving children, with the other half being inherited equally by the children;
- Children: If there is no surviving spouse or civil partner, the children of the deceased inherit the entire estate in equal shares. If a child predeceases but has surviving children of their own (ie the deceased's grandchildren), those grandchildren would inherit in their parent's place;
- Other relatives: If there is no surviving spouse, civil partner or any surviving children, other relatives such as parents, siblings, nieces and nephews may inherit in a prescribed order. Ultimately, if there are no surviving blood relatives to inherit the deceased's estate, the whole estate would go to the Crown.
Importantly, an unmarried partner or person cohabiting with the deceased is not included as a category of beneficiary under the intestacy rules. This is the case irrelevant of how long the couple have been together or if they have children together.
As such, if one partner dies without a Will, the surviving partner has no automatic right to inherit anything from the estate, including any share in a property they may also live in together. This can lead to several negative consequences:
- Loss of home: If the property was owned solely by the deceased, the surviving partner could face the loss of their home if the property is inherited by another family member;
- Financial hardship: Without any entitlement to the deceased's assets, the surviving partner may suffer financial hardship, especially if they were financially dependent on their partner or lived in a property owned by their partner.
- Legal difficulties: The surviving partner may have to engage in lengthy and costly legal proceedings to seek provision from the estate under the Inheritance (Provision for Family and Dependants) Act 1975.
In such circumstances the surviving partner may be required to rely on the deceased's relatives who have inherited under the intestacy rules and who may choose to provide for the surviving partner out of their own inherited share. However, this relies on the goodwill of the relatives and is not guaranteed nor legally enforceable and may require a formal variation of the deceased's Will and tax advice being obtained by the parties involved.
Inheritance (Provision for Family and Dependants) 1975 Act claims
The 1975 Act enables certain categories of claimant, including cohabitants of two years or more and any child of the deceased, the opportunity to bring a claim against an estate where they believe they have not received reasonable financial provision. A 1975 Act claim can be brought whether or not a person dies intestate or has a valid Will in place on death. In the case of a cohabitant or child, the level of maintenance is restricted to a reasonable sum required for the claimant's maintenance.
While a cohabitation agreement cannot override the rules of intestacy (and it cannot prevent a party from bringing a 1975 Act claim – nor can having a valid Will in place), it can serve as evidence of the deceased's wishes and may be taken into account if a surviving partner who has not been adequately provided for makes a claim under the Inheritance (Provision for Family and Dependants) Act 1975. Having a valid Will, and taking legal advice during the preparation of a Will, can also act as evidence of the testator's intentions with regard to the provision they would like to make for their dependants from their estate. Therefore, cohabitation agreements and Wills are valuable tools for cohabiting couples to assert their intentions and safeguard their interests both during lifetime and on death.
Protecting cohabiting couples
To avoid the harsh outcomes of the intestacy rules and the consequences of separation during lifetime, cohabiting couples should take proactive steps:
- Make a Will: The most effective way to ensure that your partner is provided for on your death is to make a Will that clearly sets out your wishes and makes provision for your partner, particularly if you live with them or maintain them in any way.
- Consider joint ownership: Owning property as joint tenants means that upon the death of one partner the property automatically passes to the surviving partner. This type of property ownership is not suitable in all circumstances and so specialist advice should be sought prior to changing the way a property is owned. Having an express declaration of trust is also a worthwhile step if the couple accept the property may have to be sold on death and the proceeds divided between the partner and the deceased's family.
- Life insurance: Taking out a life insurance policy naming the partner as the beneficiary can provide financial security.
- Consider entering into a cohabitation agreement: this will set out the couple's intentions towards each other on separation (during lifetime) including, for example, which party should leave the couple's home and whether any financial provision will be made for the financially weaker party to help them to adjust to life on their own.
It is crucial for cohabiting couples to understand the implications of their separation either during lifetime or on death and to take appropriate legal advice to protect themselves and each other in the event of death. By making a Will, entering into a cohabitation agreement and considering other legal mechanisms, cohabiting couples can ensure that their partner is provided for and is not left financially vulnerable at a time of bereavement.