Traditionally, when two people fall in love, they get married and have children. But, in modern society, many couples choose to simply cohabit instead. Marriage is sometimes seen as less important and ‘just a piece of paper.’ Whilst I firmly believe that it is a person’s own choice whether to marry or not, there are legal ramifications on death if they choose not to.
The law surrounding what happens to a person’s estate on death is by no means modern. I always give the example of the Wills Act which dates back to 1837 as it is still one of the main pieces of law used today – approaching 200 years from its creation, it remains valid law.
It is a fact that the law favours married couples and some examples of this are as follows:
Any assets given to spouses in a Will or by Intestacy are exempt from Inheritance Tax.
When the first spouse dies, any of their unused nil rate bands for Inheritance Tax can be transferred to the estate of the second spouse which minimises any Inheritance Tax payable.
The Intestacy Rules (a set of rules which govern who gets what when a person dies without a Will) only recognises the spousal relationship. A cohabiting partner will not receive anything under the Intestacy Rules.
Some pension policies will only pay an ongoing spouses pension if the deceased was married when they died. They may refuse to pay to a surviving cohabiting partner.
The Government will only pay the Bereavement Allowance (previously known as the Widow’s Pension) to a surviving spouse. A cohabiting partner is not eligible to claim it. There has recently been a successful case in Northern Ireland concerning this, but it is yet to be seen whether this will also begin to apply to cohabitees in England and Wales.
So, whilst not a very romantic reason, for Inheritance Tax purposes and for the surviving cohabitee’s financial security, it may just be easier to get married. But if this if not a feasible option, then at the very least, you should seek legal advice and have a Will put in place along with making the relevant arrangements with your pension providers and life policy companies.
Maybe one day the law will catch up with society and cohabitees will enjoy the same rights as married couples on death but until that day comes, you should ensure that your affairs are in order.
For individual advice and assistance contact our Wills, Probate and Trusts Team to find out how we can help.
Christina Polychronakis, Solicitor, Wills, Trusts and Probate