Cohabitation and Inheritance

We occasionally meet with clients whose partner has died intestate who believe that although they were not married, they are entitled to receive the estate as they were the common-law spouse of the deceased.

Unfortunately we have to advise that the concept of common law marriage is a myth and irrespective of the length of time they have lived together as a couple they have no legal standing under the Intestacy Rules to inherit the estate.

The only situation in which they would inherit the deceased's assets is if they owned the assets as 'joint tenants', or have been nominated to receive the proceeds of a life policy.

This can result in an unsatisfactory distribution of the estate. For example, it may be that it is the children of the union are those entitled to inherit the deceased's estate outright, thus placing the surviving partner in the difficult position of having to make a claim against their own children to receive some of their partner's estate. Suffice to say, this process can be costly and lengthy, especially where it involves children under the age of 18 as beneficiaries of the estate.

Consequently, we would strongly recommend that cohabiting couples review how they own assets between them and ensure that a Will is put in place to provide for their partner as they intend to in the event of their death.

Another disadvantage for co-habiting couples is the liability to Inheritance Tax (IHT) which applies regardless of whether the deceased died testate or intestate and also applies to the deceased persons share of joint assets.

Gifts between spouses or civil partners are exempt from IHT, whereas gifts to a co-habiting partner do not attract the same exemption. Therefore where assets left to a surviving partner exceed the current nil rate band of £325,000, IHT will be charged at 40% on the value over this sum, which for those with substantial assets can result in some rather eye watering sums of tax to pay.

This can be of particular concern where the wealth of the deceased partner is held within the home and where the surviving partner may not have the cash resources to settle the liability without a sale of the property, or in situations where the wealth between the partners may be held unequally, although relied on by both.

Ashfords Trusts and Estates Team would be pleased to meet with you at any of our office locations to discuss your Will requirements and Inheritance Tax Planning. The team can also provide assistance in making claims against an estate of a deceased partner under the Inheritance (Provision for Family and Dependants) Act 1975.