Many people think that if they share financial commitments with a partner; own a property together, bring up children and conduct their finances in the same way as a married couple or those in a civil partnership do – they have the same rights if the relationship ends. This isn’t the case. No matter how long you have been living together, you won’t acquire the same legal status. If the relationship breaks down, the division of assets is very different.

‘Common law spouse’ status doesn’t exist

Many people believe that there is a ‘common-law spouse’ status in UK law, but there isn’t. If a cohabiting couple split up, each party leaves with what they owned at the outset. So, if a couple lived in a house owned by one of them, their partner will have no claim on it, even if they have paid bills, helped to renovate it or contributed in other ways. (However, in Scotland cohabitants can claim for financial provision through the courts when the relationship ends through termination or death.)

Cohabiting couples in England and Wales (but not in Scotland) do not have any financial responsibility for children outside of what is ordered under the government’s child maintenance scheme, the Child Support Agency.

Couples in the UK can protect themselves by writing a ‘cohabitation agreement’ or a ‘declaration of trust’. Both these contracts are legally binding and set out exactly what each party would receive on separation, and can include any spousal or child payments that will be made. It is also important to have valid Wills in place.

Property matters

“If one partner dies, the surviving partner does not have the same status in law as a widow or widower. It can come as devastating news to cohabitees that there is no automatic right to inherit homes, pensions or other assets.

If a partner in a cohabiting relationship dies without a Will, the surviving partner will not, as a matter of course, inherit their assets unless the couple owned property jointly. In addition, money or property inherited from an unmarried partner is not exempt from Inheritance Tax.

When it comes to pensions, although a spouse will be eligible for a widow’s or widower’s pension, this isn’t generally the case if the couple are not married. There are conditions that apply; they need to be living together, financially dependent on each other and living as if married. They must be free to marry, so this would exclude anyone who was not divorced from a previous spouse.

Safeguarding your rights

With more and more couples choosing not to marry or enter into a civil partnership, proper financial and legal advice is needed to ensure that everyone’s interests are protected.

Many people believe that there is a ‘common-law spouse’ status in UK law, but there isn’t. If a cohabiting couple split up, each party leaves with what they owned at the outset.
The value of the investment can go down as well as up and you may not get back as much as you put in.

For further information or if you’d like to discuss how Ablestoke can assist you further, please contact Amanda Paget, and she will be able to put you in touch with the most appropriate Financial Planner to fit your needs.

Amanda Paget
0203 463 8836

Ablestoke Financial Planning LLP

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