201910.05

Cohabitation

According to the Office of National Statistics the number of couples living outside a marriage is growing faster than the number of married couples. Guardian reports “The overall number of families in the UK rose by 8% between 2008 and 2018, from 17.7 million to 19.1 million, accompanied by a marked change in the ways people are choosing to live”.

Cohabitation has lost stigma and become an equivalent life choice.  One in five people believe that they have a claim to their cohabitees’ property if they have been cohabiting for five years or more. That’s an incorrect statement.  In July 2018 the Office for National Statistics trend revealed that this is not only confined to younger people but couples in their sixties and seventies has never been higher.

This may be because many believe that after living with your cohabitees for a certain number of years you somehow acquire the title of “common law marriage”.  Regrettably that’s incorrect as common law marriage is only a myth and nothing else.

The punitive reality is that living together does not of itself create legal rights against or responsibilities between cohabitants legally, irrespective of whether it should morally. Living together for whatever number of years provides neither cohabitant with rights to financial support at the end of a relationship for themselves. Under current law, cohabiting couples do not have the same legal rights as married couples and if separation occurs, there is limited recourse to their ex-partner’s property, pension or financial support.

Let’s look at the respective legal rights of married couples and cohabitees:

Upon Separation

There is no statutory framework to empower the courts to divide all the assets of cohabiting couples in comparison to married couples. As the law stands, married couples enjoy superior rights over property, pensions and inheritance under the Matrimonial Causes Act 1973 as each party to marriage/civil partnership has an obligation to provide financially for that party in the marriage/civil partnership – both during the marriage/civil partnership and on termination. On a marriage breakdown the court has the power to redistribute property and finances, but it has no such power to do so on the breakdown of a relationship between cohabitants. Couples in cohabiting relationships do not have this obligation to provide financially for one another. Instead cohabitants will need to rely on contract, property or trust law for help.  Pursuing a claim in these areas is often complex, costly and unclear.

Children 

A father married to a mother has automatic parental responsibility for any child of the mother. Parental responsibility includes amongst other things the ability to make decisions determining religion, education and consent to medical treatment.  An unmarried father only obtains parental responsibility by order of the court or by agreement with the mother unless the child is born after 1 December 2003 and the father is named on the birth certificate.

There is however little distinction between married couples and cohabiting couples under the Children Act 1989.  If parents cannot agree arrangements for the children, then whether married or unmarried, it is possible to seek the intervention of the court on matters such as with whom the child should live and how often they should see the other parent. The Child Maintenance Service also makes no distinction between married and unmarried parents and the parents liability is not dependant on his /her marital status.

Tax Implications

Married couples/civil partners received favourable tax treatment such a tax exemption on gifts between spouses and certain exemptions on inheritance tax should their spouse/civil partner die. Cohabitants do not receive any form of favourable tax treatment.

Upon Death

Should a spouse/civil partner wish to make an application for financial provision from the estate of their deceased spouse/civil partner they are treated more favourably in terms of the factors to which the court must have regard in determining that application? In contrast cohabitants do not benefit automatically under the intestacy rules. Nor is there any exemption from inheritance tax on assets passing to a cohabitant. It is essential therefore those cohabitants make provision for their partner in their will if either partner wants the other to be provided for financially in the event of death. Any person who before the death of another person was being maintained by that other person may make an application for financial provision from the estate of the deceased but must comply with more stringent criteria.

As a general rule, when cohabitants separate, they keep the property and assets they own in their sole name. However, those who have children together still have the legal responsibilities of a parent and will be expected, depending on their financial circumstances, to support the upbringing of those children.

It may be possible to bring a claim against a former-cohabitee for the benefit of supporting a child you had together, depending upon the circumstances of your individual situation.

Hence, given the lack of legal protection cohabitants should consider these practical and protective measures in the eventuality their relationships come to an end:

  1. Enter into a cohabitation agreement. You could avoid expensive and upsetting litigation later by considering these matters in advance and discussing with an experienced family lawyer what can be done. As you set out on the path of living together you should carefully consider the implications of doing so. As we have already mentioned there is no specific law governing your rights when living together.  It is important for you to consider at the outset certain financial and property matters so as to ensure that you are both in agreement about them.  If you do not, they may become the subject of disharmony within your relationship or could even be the cause of you splitting up. With high property prices in London many parents help their children financially to get on the property ladder by contributing towards a deposit. It is important that the parents document, before handing over any funds, the basis on which the money is given or loaned and what is to happen to it if the relationship breaks down. Otherwise they could be waving goodbye to thousands of pounds.
  2. Consider a deed of trust when purchasing a property. Be absolutely certain of the decision that you are making to share the ownership of a property. The trust deed changes the legal ownership. It can (and should) be protected at the land registry and can be enforced in court. The purchase of a property is a long term commitment, longer than some marriages and a trust deed reflecting the true ownership must be just that: the true ownership. You should also work out very carefully the proportions in which you will own the property, and don’t forget to include the costs of the purchase in your calculations. If only one party is paying for the stamp duty that should be taken into consideration when you work out the percentages. The proportions that you set out in the trust deed are the proportions that will be used to distribute the sale proceeds when the property is sold (or possibly the amounts that each party has to pay for the property to be sold if the property loses value).Consider having a will in place. A will making provision for each other and any children in the relationship is necessary.
  3. Keep pension and life insurance nominations under review.
  4. If cohabiting couples decide to marry, it is prudent to enter into a pre-nuptial agreement if one partner has significant inheritance prospects or brings much more wealth to the marriage than the other. A pre- nuptial agreement can give clarity about which assets are to be shared and which ring-fenced if there is ever a divorce.

Conclusion

 There is no doubt that the Law Commission has recommended change in this area and a motion to bring our laws in line with modern family types is currently supported by many MPs from all of the main parties but until such time, couples need to be aware that rights do not exist through ‘common law’ marriage so they can take appropriate steps to protect themselves and their families.

For further information please contact Vijaya Sumputh 020 8363 4444, vijaya.sumputh@curwens.co.uk

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