Despite common misconceptions it is important that co-habiting couples understand that in the UK there are no legal safety nets for couples who do not marry.
Although the terms common-law wife or husband are frequently used to describe a couple who live together, these relationships do not have any legal recognition.
So if you, as so many do these days, decide to set up home with someone without entering into the institution of marriage you need to be aware that if things go wrong you could miss out financially.
There are many sad stories about couples who have lived together, bringing up a family only to discover that following a break up one of them has no legal right to a home or financial support. There are some provisions in Scottish law, but this is not the same as the legal responsibilities of a spouse.
Some of the financial pitfalls of co-habitation are listed below:
If you are living together and you and your partner have separate bank accounts, neither of you can have access to money held in the other partner’s account. If one partner dies, any balance in the account will be the property of your partner’s estate and cannot be used until the estate is settled.
If you have a joint account, then both you and your partner have access to the account, regardless of whether only one of you pays into it. If your relationship ends, the money will belong to both of you. However, if one of you didn’t use the account at all, for example, you didn’t pay any money in or take any out, it may be difficult to claim that you have any right to it.
Death and inheritance
If one partner dies without leaving a will, the surviving partner will not automatically inherit anything unless the couple owned property jointly. As an unmarried couple, you need to make wills if you wish to make sure that the other partner inherits.
If one partner dies without leaving enough in their will for the other to live on, the surviving partner may be able to go to court to claim from the estate.
If you inherit money or property from an unmarried partner, you are not exempt from paying inheritance tax, as married couples are.
You are liable for any debts which are in your own name only, but not for any debts which are just in your partner’s name.
You may be responsible for the whole of debts in joint names and for other debts for which you have ‘joint and several’ legal responsibility. For example, in England and Wales, if you owe council tax, you and your partner will both be responsible for the debt, regardless of whether one of you contributes or not.
If your partner has a debt for which you have acted as guarantor, you will also be held legally responsible for paying it.
Financial support (maintenance)
Neither partner has a legal duty to support the other financially. Voluntary agreements to pay maintenance to each other may be difficult to enforce.
If your partner is the sole owner, you may have no rights to remain in the home if you are asked to leave.
The only way you may be able to claim long-term rights to the property is if you are able to show you have a ‘beneficial interest’ in it. This is a way of getting a court to formally recognise contributions you have made towards the home. The court could also recognise an understanding you had with your ex-partner when you bought the home that you would have a share in it if it were sold.
If you are able to prove you have a beneficial interest in the home, you may be able, for example, to get the right to live in the home, prevent your ex-partner from living there or get a share of the proceeds if the home is sold.
Occupational and personal pensions
The provisions of occupational and personal pensions for dependants of a pension scheme member will depend on the rules of the scheme. Most schemes offer benefits to dependent children and some will offer benefits to a dependent partner.
Personal pensions can be arranged to give cover to whomever the pension scheme member wants, provided the pension scheme member is able to pay what might be large contributions to the pension fund.
Where a scheme is suitable for couples living together, you will need to complete an ‘expression of wishes’ form, which states who you want benefits to be paid to when you die.
Whether or not you chose to marry your partner is of course a purely personal matter, but it is important to understand that you don’t just assume that you have rights as a common law spouse. It is worth discussing any financial implications for each other if the relationship breaks down, or one of you dies without proper legal contracts in place.