At the beginning of November 2022, the Government stated that it currently has no plans to reform the laws regarding financial remedy and succession for cohabiting couples in England and Wales.
When making this announcement, the Government rejected several recommendations made by the House of Commons Women and Equalities Committee in its report – (the report).
The Government stated that:
“…existing work on the law of marriage and divorce must conclude before it could consider changes to the law about the rights of cohabitants.”
According to the report, cohabitation is the fastest-growing family type across England and Wales. There were roughly 3.6 million cohabiting couples in 2021, compared with 1.5 million in 1996.
What legal rights do cohabiting couples currently have?
It’s a popular myth that the law applies to common law husbands or wives or couples living together just as it does to married couples.
However, in reality, when it comes to cohabitation law, no matter how long a couple has been living together, they will never acquire the same rights as a married couple or civil partners. Cohabitants receive inferior protections.
When a cohabiting couple splits, they have to rely on complex property law and trust principles. Were a couple cohabiting and one of them were to suddenly die, the surviving cohabitee would not automatically inherit from their partner.
What recommendations did the report put forward?
The House of Commons Women and Equalities Committee recommended that the laws in respect of cohabiting couples should be reformed to better protect them and their children from financial issues in the event of separation. Adding that:
“It is time the law adapted to the social reality of modern relationships while still recognising the social and religious status of marriage.”
A significant recommendation put forward in the report was an opt-out cohabitation scheme to deal with the financial consequences of relationship separation, which had previously been proposed by the Law Commission.
The report also:
- Called on the Government to issue guidance on how pension schemes should cooperate with surviving cohabitants when they are claiming a survivor’s pension.
- Supported the Law Commission’s 2011 proposals in relation to intestacy and family provision claims for cohabiting partners.
- Recommended a review of the inheritance tax regime to provide cohabiting couples with the same rights as married couples and civil partners.
- Suggested that the Government should carry out a public awareness campaign to better inform the general public of the legal distinctions between marriage, civil partnerships, and cohabitation.
The Government’s response
As noted above, the Government rejected almost all of the cohabitation reforms put forward in the report as it needed to conclude the existing work in respect of marriage and divorce laws before considering changes to cohabitation law.
With regards to the proposal concerning an opt-out cohabitation scheme, the Government stated that it is already conducting a review on financial provisions for divorce and therefore will not consider changes to cohabitation law until that review has been concluded and recommendations have been made. The Government stated:
“This is because any new legal rights and obligations afforded to cohabitants would necessarily need to be considered against a baseline of rights afforded to married parties or civil partners on divorce or dissolution.”
Additionally, the Government commented that the Law Commission’s report is now 15 years old, meaning that it pre-dates the roll-out of civil partnerships for both opposite- and same-sex couples.
The Government also dismissed:
- The introduction of reforms relating to intestacy and family provision claims for cohabitees, as it would have the effect of prioritising the interests of cohabitants over other family members of the person who has died, such as their children.
- The recommendation that the Inheritance Tax regime should be changed so that it is the same for cohabiting couples as it is for married couples and civil partners.
The recommendation which was accepted was that there should be clearer guidance in respect of how pension schemes should treat surviving cohabiting partners.
Living Together Agreements
The Government’s reaction to the recommendations will obviously be a disappointing one for the 3.6 million cohabiting couples currently in England and Wales.
At this point in time, the only real option available to cohabiting couples is to put in place a Living Together Agreement (also known as a Cohabitation Agreement). This Agreement specifies ‘who owns what’ and can be really helpful in protecting a cohabitee in the case of a breakup or death of their partner.
The agreement will state who the contract is between and how the significant assets, such as property, bank accounts, valuables, etc., should be dealt with, should the relationship end.
Living Together Agreements are legally binding, so long as they are drafted as a formal legal Deed. It is important that each party takes independent legal advice and that they are both honest with the other about their finances before the agreement is prepared.
As there are other issues to bear in mind, such as Tax planning, it is usually advisable to consider Wills at the same time as a Living Together Agreement.
How can Nelsons help?
Emma Davies is a specialist family law solicitor at Nelsons.
If you need any advice in relation to cohabitation laws or living together agreements, please contact Emma or another member of our expert Family Law team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
Our team will be happy to discuss your circumstances in more detail and give you more information about the services that our family law solicitors can provide along with details of our hourly rates and fixed fee services.
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