Statistics released this summer have revealed that the number of people choosing to cohabit is growing at a faster rate than any other family type. Data from the Office for National Statistics (ONS) shows that the number of cohabiting couple families has increased by 25.8% in a decade, growing at a faster rate than married couple families.
Although families that are married with children still account for the biggest proportion of families, cohabiting couple families represent the second largest family type, representing 17.9% of the total population – equating to 3.4 million.
Clearly, this data is indicative of the changing landscape of family life; with couples increasingly choosing to live together before committing to marriage – or without getting married at all.
Taking the step of moving in with a partner is a significant commitment, especially if this is accompanied with purchasing a house or having children. Unfortunately, the law as it stands does very little to protect cohabiting couples.
However, not all couples in this position are aware of this, mistakenly believing many they are entitled to the same financial rights as married couples in the event of their relationship coming to an end – be that due to a breakup or death.
The Cohabitation Rights Bill, which addresses the rights of cohabiting couples, is in the early stages of passing through parliament. Until any new legislation comes into place, here are three reasons cohabitees should consider making a will.
Secure investment in a property
The rules around property are particularly complex for cohabiting couples. Under the rules of intestacy (that apply in the event of a person dying without a valid will in place), there is no automatic provision for the share of a property to go to a cohabiting partner. Where a couple own a house together, the starting point for who will receive the deceased’s stake in a property in the event that one of the owners dies depends upon whether the property is held by them as Joint Tenants or as Tenants in Common. If the property is held as Joint Tenants, the surviving partner automatically inherits the other partner’s share of the property. Where a house is owned as ‘Tenants in Common’, on the death of one of the joint owners, the deceased’s share does not automatically go to the survivor, but will pass either in accordance with the deceased’s will or the intestacy rules if there is no will.
A cohabitee that has moved into a partner’s home without making any changes to the legal ownership of the property and without being named in a will may find themselves entitled to nothing – even if they have contributed to the mortgage, property renovations and bills.
Many cohabiting couples live together happily for any years, during which time each party may be able to build pensions, savings, or other investments, or else one party may have inherited money or purchased a holiday property that you have together been able to enjoy. As with the main residence, there is no automatic arrangement that would allow any such assets to go to an unmarried partner on death. The only way to ensure your partner will receive the benefit of these is to make a will.
Unlike married couples, unmarried cohabitees are not able to pass their tax-free exemptions on to their partner. This means that upon death, an individual with assets exceeding the nil rate band of £325,000 would not be able to pass on this exemption to their partner, even if they are the named beneficiary in their will. The same applies to the main residence nil rate band. During the process of making a will, a solicitor will highlight this as a potential issue, therefore giving the option to make arrangements to help mitigate or reduce any inheritance tax implications.
Arrangements for children
Any couple – be they married or unmarried – may want to choose a legal guardian for their children under the age of 18 in a Will. If both parents of a child die without having appointed guardians, the court will appoint a guardian or guardians, who may ultimately not be whom you had hoped would look after your child. Using a will to appoint legal guardians has become common practice and gives parents both choice and peace of mind.
The latest ONS data goes to show that the traditional make up of families in the UK is changing. With there being far more diversity in the way we choose to live, making plans for every eventuality is more important than ever.
For further advice or assistance on Wills or estate planning, please contact Rebecca on 01457 761320 or email Rebecca@odonnellsolicitors.co.uk.
Rebecca O’Donnell is Head of Private Client at O’Donnell Solicitors.