Cohabiting couples: how your rights could change

Are you and your partner unmarried but cohabiting? Are you aware of your financial rights if you were to separate? You may be shocked to find they may be far more limited than they would be if you were married. However, this is set to change under new government reforms.

Currently, unmarried couples living together have limited financial rights if their relationship breaks down.

Many cohabiting couples in England and Wales mistakenly believe that they retain certain rights under so-called ‘common-law marriage’, but this status does not exist.

However, under the government’s ‘A fairer end to relationships consultation’ cohabiting couples may gain new rights of financial redress if the relationship ends.

Under the proposed reforms, cohabiting partners could ask the courts to intervene and make orders over homes, property, pensions and other assets.

What rights do I currently have if I’m cohabiting?

Currently, unmarried couples living together have limited rights over joint finances and property.

There are no automatic rights to each other’s property assets or savings, unless the property is jointly owned and the cash is held in a joint savings account. The courts have limited powers of intervention.

However, in contrast, divorcing couples may have rights to a portion of their partners’ property, assets and even pensions if the relationship is dissolved.

What rights do I currently have if my partner dies?

Currently, cohabiting partners do not automatically inherit their deceased partner’s property, assets or pension, unless it has been specifically provided for in the partner’s will or if they jointly owned the property with them.

Married partners, however, usually automatically inherit their deceased spouse’s property and assets through probate. In certain circumstances, they may also be entitled to a portion of their pension.

Why is the government reforming the law around cohabitation?

More unmarried couples live together than ever before. In fact, the number of couples cohabiting in England and Wales has doubled in the past 30 years, according to government figures.

Currently, 3.5 million couples live together in England and Wales without being married or in a civil partnership, according to data from the Office for National Statistics (ONS). In comparison, there are 13 million married couples in England and Wales.

However, by 2031 it is projected that one in four couples will be living together, rather than married, with more than half (51%) of babies born to unmarried parents.

The government consultation document notes that cohabiting relationships “form an increasingly common part of family life in England and Wales”, yet that when these relationships end, “there is no dedicated statutory framework” to resolve financial matters.

Gaps in the current law

The consultation document also notes that as the number of cohabiting families has increased, the gaps in the current law have “become apparent, affecting a far larger proportion of the population than in previous decades.”

As such, the government says that, through the consultation and proposed reforms, it wishes to make the law more transparent and to give couples greater autonomy in planning their financial arrangements.

Qualifying nuptial agreements are proposed, as well as safeguards for more vulnerable partners and children and protection against coercion.

What could change?

Stronger financial rights are proposed for co-habiting couples if the relationship ends, with couples qualifying if they have a child or have been living together for at least three years.

However, they are not expected to be as broad as for married couples, with a former partner being awarded a lump sum or property transfer to meet basic needs.

The government is also proposing making pre-nuptial and post-nuptial agreements legally binding, as well as giving cohabiting couples automatic rights to inherit if their partner dies without a will.

It’s also expected that couples will be able to opt out of the reforms if they agree to take legal advice or share their financial status with their partner.

Currently, in the absence of a civil partnership or marriage, couples can also sign a cohabitation agreement with a solicitor to make financial matters more transparent between them.

Expected increase in court cases

It’s thought that the planned reform of cohabitation rights could lead to a spike in new court cases by partners seeking financial redress, according to a senior judge.

His Honour Judge Edward Hess, deputy national lead judge of the Financial Remedies Court (FRC), told the Financial Remedies Journal that the introduction of changes could mean 27% more couples claiming or an additional 10,000 cases being heard by the Financial Remedies Court.