The National Centre for Social Research has found that 46 per cent of people in the United Kingdom believe that partners in a cohabiting relationship benefit from "common-law marriage" which gives them the same legal status and rights as those who are legally married. In reality, in the UK, there are no additional legal rights that result from a prolonged cohabitational relationship. This misunderstanding can cause many people to not fully examine their estate planning options and can cause hardships for surviving partners.
The Office for National Statistics explains that unmarried cohabiting couples were the fastest growing family type in the decade of 2008-18 “with a statistically significant increase of 25.8 per cent from 2.7 million in 2008". This now means that over 13 per cent of the UK population is in an unmarried cohabiting relationship. This large portion of the population do not benefit from the same rights as those couples who are married or are engaged in a civil partnership.
To give rights to this growing segment of the population, a bill has been introduced in the House of Lords. The Cohabitation Rights Bill which addresses the rights of unmarried cohabiting couples is still in its early stages. The bill aims “to make provision about the property of deceased persons who are survived by a cohabitant". If this bill succeeds, unmarried cohabiting couples will finally have more equal rights to couples who are married or in civil partnerships.
Under the current law, if one partner dies without a will, the surviving partner is entitled to nothing from their estate. In comparison, couples who are married or in a civil partnership without a will are still entitled to part of their deceased partner’s estate through the law of intestacy. The only way to mitigate this situation for unmarried partners is by creating a will.
If this has not happened, however, it still may be possible for them to make a claim based on the Inheritance (Provision for Family and Dependants) Act 1975. To be eligible to claim, the surviving partner must establish:
That they were cohabiting for two years immediately preceding death;
That they were cohabiting at the time of death; and
That they lived as if they were married/civil partners.
In both creating a will to pass an individual’s estate to their partner or claiming inheritance through a court, however, there will also be issues regarding inheritance tax that married couples do not face. The nil-rate band is the threshold before inheritance tax is incurred. Currently, this is GBP 325,000 and will remain at that figure until at least April 2026. Couples who are married or civil partners are allowed to transfer their entire estate – regardless of value – to their partner upon death with no tax liabilities. The surviving partner will also then have two nil-rate bands to use totaling GBP 650,000.
Unmarried partners do not have this same allowance. Instead, anything above the nil-rate band is taxed upon the death of the first partner. The assets that were passed to their partner are then taxed again once the second partner passes away. This double taxation is yet another issue that unmarried partners face in their estate planning.
The introduction of the Cohabitation Rights Bill is the first step in ensuring unmarried partners can have the same protections as married couples. The bill, which has been held up by the bureaucratic process, would alleviate issues that a continuously growing portion of the population face. In particular, issues surrounding the inheritance tax system within the UK which is especially complex for unmarried partners. This bill would be a welcome remedy to the complexities and hardships that cohabitees face.