Know the law
About 22% of couples who live together aren’t married or in a civil partnership, according to official data. The figures for the UK show there were about 3.6 million cohabiting couples in 2021 – more than double the 1.5 million in 1996.
However, when it comes to people’s rights when a relationship breaks down or one person dies, cohabitants don’t enjoy anything like the same levels of protection as married couples.
No matter how long you live together, there is no such thing in law as a common-law spouse in England and Wales.
At last month’s Labour party conference, Emily Thornberry, the shadow attorney general, pledged to change the law to give cohabiting couples financial rights over each other’s property after a breakup.
At present, unless assets are held in joint names, you have no guaranteed rights to property, pensions or savings if you separate or one of you dies.
You can find more information on the legal differences between living together and marriage by visiting the Citizens Advice website.
View image in fullscreenUK figures show there were about 3.6 million cohabiting couples in 2021. Photograph: Tero Vesalainen/Getty Images/iStockphoto
Set up a legal agreement
Take steps to get the financial side sorted before you move in with a partner.
A sensible starting point is to draw up a cohabitation agreement that clearly sets out who owns what in the relationship from the outset, including property, savings and belongings. It can also clarify who pays which bills and other day-to-day expenses.
This document may also be used to detail what partners are entitled to in the event of a breakup.
Ideally, you should have an agreement drawn up that’s specific to your own circumstancesHargreaves Lansdown’s Sarah Coles
A lawyer can write a cohabitation agreement on your behalf for a typical cost of between £500 and £1,000.
In terms of big names, Co-operative Legal Services charges a fixed fee of £1,200, including VAT.
There are some cheap and free options around. For example, you can create and download your own agreement online from companies such as Rocket Lawyer or Lawpack.
However, it may be wise to seek legal advice.
Sarah Coles, the head of personal finance at the investment platform Hargreaves Lansdown, says: “Ideally, you should have one drawn up that’s specific to your own circumstances, because downloadable templates could miss something key.”
She adds: “If you eventually end up in court, the agreement is far more likely to carry weight if you both received independent legal advice that demonstrates you understand everything in it and agree.”
Go to Advicenow for a useful guide when considering what should be included in a cohabitation agreement. Advicenow is an independent, not-for-profit website run by a legal charity. On its website you can download a standard guide or pay £45 for an extended guide if you are drawing up your own agreement.
Draw up wills
Unlike married couples, cohabitants don’t have rights to their partner’s assets if they die without naming them in their will. This makes it particularly important to have a valid will in place.
If you want peace of mind that your wishes will be met and there won’t be any disputes after your death, you may want to use a solicitor, as they are regulated. Search the Law Society’s website to find a solicitor, who can usually draw up a will at a cost of about £250-plus.
However, throughout November, Will Aid solicitors are writing basic wills without charging their typical fee. If you take up their service, you will be invited to make a donation to Will Aid, which is a partnership between the legal profession and nine UK charities. It suggests £100 for a single basic will, and £180 for a pair of basic “mirror” wills.
Another option is to draw up a simple will through an online will-writing service such as Farewill (£100 for a single will or £160 for couples). A will-writing service should be a member of an official body such as the Society of Trust and Estate Practitioners, the Institute of Professional Willwriters or the Society of Will Writers. These provide codes of conduct but aren’t official regulators.
View image in fullscreenCohabitants don’t have rights to their partner’s assets if they die without naming them in their will. Photograph: turk_stock_photographer/Getty Images/iStockphoto
Think about tax
Married couples and those in a civil partnership benefit from some tax advantages that cohabiting couples don’t enjoy, so it is important to be aware of these if you don’t tie the knot.
Anything left to a spouse or civil partner in a will is free from inheritance tax (IHT), so many couples make mirror wills to leave their assets to each other.
Sarah Green, a family lawyer at Michelmores, says: “That way, there is no IHT to pay on the first death, and this tax usually only becomes relevant when the surviving partner dies.”
But unmarried partners are subject to 40% tax on any assets exceeding the £325,000 nil-rate band. “This means there may be IHT to pay when the first of the couple dies, and then again on the second death,” Green says.
View image in fullscreenIf you own a property as joint tenants, you will both own the whole property. Photograph: Nick Maslen/Alamy
Alistair Myles, a family lawyer and founding partner of Ribet Myles, says: “It’s therefore important to structure the ownership of assets, and particularly property, in a way that ensures that in the event of death, the surviving partner isn’t lumbered with a large IHT bill with little ability to meet it.”
Property ownership
If you are buying a home together, you will need to arrange a contract as tenants in common or joint tenants.
If you own a property as joint tenants, you will both own the whole property. If you are tenants in common, you will each own a specific share. The property will only automatically pass to the other partner on death if it is held in joint names. You can leave your share to whoever you wish if you are tenants in common.
If your partner owns the property and you break up, you would need to prove you have a “beneficial interest” in the property to make a claim. But even if you have contributed to home improvements or a mortgage, you may struggle to gain rights to a financial share without an agreement in place. Any contributions, such as caring for children, don’t count, and neither do payments towards household bills.
Pensions and benefits
As part of a cohabiting couple, you are not entitled to any of your partner’s state pension if they die.
Coles says: “Your spouse may be able to inherit part of your state pension but cohabiting couples don’t have this right.”
If you want your partner to inherit some, or all, of your personal and workplace pension, you will need to complete your provider’s expression of wish form. This sets out who you wish your pension to pass to on your death. You can usually find this form quite easily by logging on to the provider’s website or the member portal.
Fortunately, since February 2023, the eligibility criteria for bereavement support payment and widowed parent’s allowance has been extended by the government to cohabiting parents.
