An arrangement similar to a marriage is referred to as a "common law marriage". It is a pure fallacy that unmarried couples who live together have a common law marriage, as almost half of the population in England and Wales wrongly believes. Research suggests that 46% of the population mistakenly believe that a common law marriage provides the same financial rights as spouses or civil partners, which is untrue. Legislation has been introduced in Scotland, Ireland and Europe but our legislation has remained unchanged for many years.
What distinction exists between the rights of a cohabiting pair and those of a married couple or civil partnership upon their separation?
When parties are married and subsequently divorce or dissolve their civil partnership, they have the right to a fair share of assets that they own. The court has a discretion to consider the circumstances of each individual relationship and can make various orders, which can include: orders providing one party pays spousal maintenance to the other; a sale or transfer of property; a transfer of capital; a transfer of shares in a business; pension orders (pension sharing, offsetting and attachment orders); and orders relating to inheritance.
Unfortunately, the law relating to couples cohabiting offer very limited protection on separation and also on death, this is despite the length of time they have lived together. The result can cause financial hardship for the more vulnerable party. Therefore, if a couple have been in a relationship for 10 or 20 years and they have raised children together, one party may believe that they are protected in law. This is not the case. The law applicable would fall under the Trust of Land and Appointment of Trustee Act 1996 (TOLATA) and/or if there are children, Schedule 1 of the Children Act 1989 but both of these Act’s are limited to what they can order.
Where one party owns a property in their sole name, the non-owner would have to demonstrate that they have a beneficial interest and an entitlement to the property by way of a common intention. To be successful for a claim under TOLATA, the non-owner would have to demonstrate to a court that there was a common intention to own the property jointly, whether this is by an express agreement or through an inference from all of the circumstances that a property should be jointly owned, although, not necessarily in equal shares. The court will consider the behaviour of the parties, such as who said what at the time, whether there were promises made to own the property jointly in the future, perhaps they got engaged and this was something they were considering after marriage. It can boil down to who the Judge agrees with.
Those couples who have children together can rely on Schedule 1 Children Act 1989 for financial provision for a child, however, there is no provision for maintenance for the former cohabitant. Financial provision for children includes periodical payments, capital lump sum payments, or a transfer of settlement of a property. However, the property will be in trust during the children’s minority (age 18 or until they finish university) and ownership will revert back to the party who owns the property, essentially leaving the parent looking after the children homeless. It is very much child focused as opposed to the parent with care responsibility. If there are no children, then you would have to rely on whether or not you have a claim against the property and rely on TOLATA.
Cohabitants do not have an automatic right to inherit a partner’s estate.
There is also very little protection for a cohabiting party on the death of the other if there is no Will or no provision granting a gift or license to live at the property within the Will. In that situation, a party would have to rely upon the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision, however, the couple must have lived together for a period of two years immediately leading up to the death. There could be a situation under intestacy rules (where there is no Will), where an unmarried party with children dies intestate, the children would inherit but the other party could be left without anything. Whereas, if you compare a surviving spouse or civil partner, they are entitled by law to seek financial provision that would be reasonable in all the circumstances of their case, whereas, a cohabitant can only claim reasonable provision for their own maintenance.
There are no automatic rights to claim a share of their former partner’s pension.
For some couples, the second most valuable asset other than the family home is a pension. Unless you are married or in a civil partnership, cohabiting couples are not entitled to claim a share of their former partner’s pension, unless they have been nominated a beneficiary, which is subject to the pension scheme rules.
So where does this leave you?
The Cohabitation Rights Bill 2023 aims to improve this situation. The proposed change in law will allow couples with children, or couples without children who have lived together for two or more years, the right to apply for financial relief. This financial relief can take the form of a capital lump sum, the transfer of a property into their sole name or to force a sale of their partner’s property and to receive capital from the proceeds of sale.
You would have to demonstrate that you have suffered an economic disadvantage as a result of the relationship or that you have contributed towards the asset. The contribution does not have to be financial, it would be caring for children or maintaining the family home.
This will be good news for couples in a long-term relationship, however, you are not forced to qualify for a financial settlement as parties can agree to ‘opt out’.
Until the law changes, there is very little protection for unmarried couples. Although reform is by no means guaranteed, there is hope for those who have campaigned for change for many years and for those cohabiting couples left financially vulnerable at the end of a cohabiting relationship.
So, what can you do to protect yourself?
A cohabitation agreement can be drawn up to protect a couple’s financial rights and responsibilities towards each other in the event of a separation. This can include what will happen to a property and your children in the event of a separation or if either party was to pass away or become ill.
Cohabitation agreements can cover all aspects of joint life and offer protection for both parties and their assets as they can go so far as providing protection, similar to marriage, such as providing equal shares of assets or access to pensions.
It is also important to make a Will as without being married or in a civil partnership, a surviving partner may not automatically inherit their partner’s assets if they die without a Will. The benefit of having a Will offers you the chance to address what you would like to happen in the event of your death, such as providing protection for unmarried couples, it can also be beneficial to all other family members and friends too.
The contents of this article is intended for general information purposes only and shall not be deemed to be or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.
If you would like to discuss your matter, please contact Amanda Adamson by telephone on 02392 001551 or by email amanda.adamson@wyethpaullaw.co.uk.
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