With married couples now making up less than half the population and one in six of us cohabiting is it now time for the law to adapt to our 21st century lifestyles?
The popular myth of a ‘common law marriage’ endures but it has no recognition in law and unless you have both made Wills neither of you will have any automatic rights to inherit from the other. This situation is not likely to change in the foreseeable future.
The intestacy rules were originally introduced almost 90 years ago yet still dictate what happens if you die without a valid Will. These rules do not recognise the person you call your ‘partner’; it is only a ‘spouse’ who will automatically inherit (your personal chattels, a lump sum of the first £250,000 of the estate and a life interest in half of the remaining estate; if there are children they will receive the remaining half. If there are no children then your spouse would receive £450,000 with the remainder shared with your parents or siblings depending on the circumstances).
The Law Commission looked into the situation of cohabitees and back in 2011 recommended that certain unmarried partners who have lived together for five years should have the right to inherit on each other’s death under the intestacy rules. Where the couple have a child together, this entitlement would accrue after two years’ cohabitation, provided the child was living with the couple when the deceased died.
In March 2013 the Government announced that these recommendations would not be implemented in this current Parliament.
The recommendations for changes to the intestacy provisions are being considered but only for spouses; the proposed reforms would:
• ensure that where a couple are married or in a civil partnership, assets pass on intestacy to the surviving spouse in all cases where there are no children or other descendants;
• simplify the sharing of assets on intestacy where the deceased was survived by a spouse and children or other descendants;
With unmarried partners still excluded the rules look set to remain antiquated and will not achieve what the deceased perhaps would have wanted and expected for their partner.
In a ‘worst case scenario’ if you were unmarried, with children, it’s the children, not you who would inherit everything. This could mean you have to take legal action against your children to be able to afford to continue to bring them up! This is something no partner could ever have intended.
To add insult to injury the inheritance tax provisions only favour spouses. All gifts to spouses are exempt for Inheritance Tax purposes. Everyone has a Nil Rate Band, which is the part of your estate which can pass entirely free of inheritance tax. It is currently £325,000. If you are unmarried and leave your estate to your partner they only get their inheritance once the tax man has taken his share (40% of the value of the estate above £325,000). However if you are married and leave your estate (or part of it) to a spouse not only is the entire gift exempt from inheritance tax but any part of your own nil rate band that you do not use can be transferred to the estate of your surviving spouse so that up to the value of two full Nil Rate Bands can pass free of Inheritance Tax.
So whilst the government has decided not to implement the recommendations and make the intestacy rules ‘fit for purpose’ the only way to ensure that your partner inherits your estate is to make a Will! A valid Will ensures that your assets will go to the person you chose and not the person the law says is entitled.
If you would like to discuss these matters in more detail and are interested in making a will, please do contact our Private Client Department on 020 7228 0017 to see if you can make an appointment with one of our solicitors.
