The ‘Common Law Marriage’ myth

Wednesday 19 January 2022

Couples that live together but are not married or in a civil partnership are known as cohabitees. It is commonly believed that, if a couple have lived together for a significant period of time, then they have entered into a ‘common law marriage’ or ‘common law civil partnership’ which has a similar status to a legally recognised marriage.  However, these terms were coined by the media and are not legally recognised.

The use of the phrase ‘common law marriage’ may make someone think that they have the same rights as a couple in a marriage or civil partnership when this is not the case. Here are three things you need to know if you cohabit with your partner.

1. Your Assets

Any assets in your sole name will pass according to your Will or, if you do not have one, the law of intestacy. This includes your share of a jointly held house, if it is held as tenants in common. Couples who are not married or in a civil partnership have no right to inherit assets under the law of intestacy so, if you wish to leave some or all your assets to your partner, then you will need to make a Will to this effect.

2. Joint and Nominated Assets

If you have any joint assets with your partner, such as bank accounts and investments, then the assets will automatically pass to them. If you jointly own a house, then it will only pass to the survivor if it is held as joint tenants.

Pensions and death in service benefits can be nominated to a specific person on your death. These types of policies are not governed by your Will and so pass to the nominated beneficiary irrespective of the terms of your Will and the law of intestacy. If you have an occupational pension or your employer offers a death in service benefit it is very important that you nominate someone to receive these benefits and that you keep this up to date.

3. Inheritance Tax

Assets which pass to a spouse or civil partner pass to them free of tax, but this does not extend to unmarried partners.

Every person has an Inheritance Tax allowance of £325,000 (the ‘nil rate band’) which allows assets to be passed to any beneficiary free of tax. If all assets are left to your partner and the value of the estate is less than £325,000 then will be no tax to pay but if the value of the estate exceeds this, then the excess will be subject to tax. If you have assets that you would like to leave to your partner and they are likely to exceed £325,000, you should seek advice so you are clear about the tax implications of doing so.

If you would like to discuss making a Will or discuss Inheritance Tax please feel free to contact a member of our team today on 0113 207 0000.