As part of Resolution’s Cohabitation Awareness Week, we have asked Katherine Miller at Renaissance Legal to discuss the impact on unmarried couples if one partner were to die when there is no Will in place. Over to Katherine…

Alongside Family Law Partners, we’re supporting Resolution’s Cohabitation Awareness Week. Resolution is campaigning for cohabiting couples to have at least basic rights on relationship breakdown or death of their partner.  Resolution is also working to raise awareness so cohabiting couples can take measures to protect themselves.

As the law currently stands there is a severe lack of rights and legal protection for cohabiting couples, but for many cohabiting couples, this may not be clear until there is a change in their circumstances. As mentioned this could be a separation or the death of one partner.

At such a difficult time, the surviving partner may not realise the implications for them and the financial impact that their partner’s death will have. Cohabiting couples do not have the same rights as those who are married or in a civil partnership.

These are some of the key issues that unmarried couples who live together need to be aware of:

Inheritance

The laws which determine who inherits your estate (i.e. everything you own) if you don’t have a valid Will in place when you die are known as the Intestacy Rules.  These rules allow for your estate to pass to close family, such as children, parents or siblings, but they do not include your unmarried partner.

This could leave the surviving partner in a financially unstable position.  For example, if your partner owns the house you live in, but does not make a Will providing for you, you will not inherit the property and you will not have the right to continue to live in the property.

The same rules would apply to any bank accounts or savings that your partner held in their sole name.  These would not pass to you and you would have no rights to use the funds held.

Your only option would be to make a claim under the Inheritance (Provision for Family and Dependents) Act 1975 for the Court to decide what provision should be made for you.  This can only be done if a number of conditions are met and it is a costly and time-consuming process during an already difficult and stressful time.

It is essential for unmarried couples to make Wills and ensure that their wishes are set out and followed.

Pensions

A cohabiting partner also does not have an automatic right to benefit from their partner’s pension.

It is important to make sure any pension benefits and other assets such as a death in service benefits or life policies are nominated to each other.  By taking this step, these assets can pass to you and ensure that additional financial hardship is not caused.

Tax

The death of a cohabiting partner can result in an unexpected tax liability. The transfers of assets, e.g. your home and money, between spouses and civil partners aren’t subject to Inheritance Tax and Capital Gains Tax.  If spouses or civil partners leave their estates to each other then there will be no tax liability on the first death. However, on the death of a cohabiting partner, anything left to the survivor may be subject to Inheritance Tax at the rate of 40% on the value of those assets. This could leave the surviving partner having to pay a significant sum in tax on the death of their partner before they can receive all of the assets.

Renaissance Legal specialises in planning effectively for the future with Wills, Trusts, Powers of Attorney, Court of Protection applications and Inheritance Tax Planning. Contact Katherine Miller here.

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