Marriage vs. Cohabitation: Navigating financial and legal complexities in modern relationships

The Office of National Statistics has recently announced that the number of people who are married or in a formal civil partnership has fallen, for the first time, below 50%. Likewise, in 2022 the number of unmarried but cohabiting couples increased to nearly 30%.

Despite this shift away from couples choosing a legal commitment to each other, towards a more informal, fluid approach to long term relationships, there are still some important issues to be considered.

Before rejecting the idea of marriage or civil partnership altogether, couples must understand that simply co-habiting, does not automatically allow them to acquire any level of priority when it comes to each other’s financial affairs. Without formal legal documentation in place, when it comes to inheriting assets, tax or the ability to make financial or medical decisions for a partner who has lost capacity, there is no such thing as a common-law spouse.

For example, where a couple live together for decades but never marry or enter into a civil partnership, if one of them were to die without a valid Will in place, the surviving partner may not be entitled to any of the deceased partner’s assets. Instead, their assets may pass under the rules of intestacy to the deceased spouse’s closest surviving relatives. A valid Will can prevent this situation from arising.

Although a couple may have Wills in place, where there is no marriage or civil partnership, if either of them were to die, no spousal tax exemptions would apply and passing assets to the surviving partner could result in inheritance tax becoming payable.

With careful planning and professional advice, such problems can be mitigated, if not completely avoided.

Even where a couple have chosen to marry or enter into a formal civil partnership, seeking professional advice can also help prevent problems and unnecessary inheritance tax arising. It’s also worth remembering that unless prepared in contemplation, marriage and civil partnership revoke any existing Will you may have. So even if you think you have covered all bases, its best to take advice.

The rise in ‘blended’ families has resulted in our familial structures becoming increasingly complex. At Porter Dodson we often advise couples where one or both parties are divorced or widowed, with children from previous relationships. It is natural to want to provide for a new partner whilst protecting the underlying capital for children and the right Will can ensure this happens, in as tax efficient a way as possible.

We can help you

Our experienced Private Client Solicitors can help you through the process and answer all of your questions. Whatever your requirements, Porter Dodson are here to help.