How to protect a ‘Common-law’ husband or wife
There is no such thing as a ‘common-law’ husband, wife or marriage. This term has come to be used socially and by insurance companies but has no legal meaning in England and Wales.
Regardless of how long you may have cohabited with your partner, if you are not married or in a civil partnership, your partner will not benefit from the rights that a husband or wife would receive.
When someone dies without making a Will, the intestacy rules decide who will benefit from their estate. If a person is married or in a civil partnership at their death, they will be the main beneficiary of the estate followed by any children, parents and then siblings. Cohabiting partners are not mentioned within these rules therefore, unless you make a Will, a cohabitee will not receive anything upon your death.
Unmarried couples will also lose out on the tax benefits that married couples receive upon death. For example, a husband and wife can leave an unlimited amount to one another with no Inheritance Tax payable. If however the couple were not married or in a civil partnership then anything above £325,000 (more if entitled to a residential nil rate band) would be taxed at 40%. On an estate of £500,000 this would mean a tax bill of £70,000.
By making a Will, unmarried couples can ensure that their partner is able to live in their home for the rest of their lives, pass on their assets and ensure that their estate is left in a tax efficient manner.
Joint Ownership of your Home
There are two ways in which you can jointly own your home. Firstly, ‘joint tenants’ allows the property to pass automatically to the survivor on the death of the first co-owner (regardless of what is said in a Will or the intestacy rules) and the second is ‘tenants in common’ which allows each co-owner to have a share of the property which can be left in a Will or pass through the intestacy rules. It is important that you ascertain how your property is held to ensure that it passes to your chosen beneficiary.
What rights do you have if you aren’t married?
If your partner has died and you did not receive anything from the estate, you may be entitled to make a claim against their estate on the basis that you were ‘dependant’ upon them. This is often a costly and lengthy process involving court proceedings and therefore should be seen as a last resort.
For more information on these issues, please contact our private client department.