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The Pitfalls of Living Together

A step back in time...

Let's go back to 1753. The British Museum was founded, George II was king and Beau Nash presided over the fashionable resort of Tunbridge Wells. It was also the year of Lord Hardwicke's Marriage Act. Since the Marriage Act in 1753, there has been no legal recognition of a "common law marriage" but a recent survey found that 61% of people believe that living together for long enough gives the same rights as being married.

Back to the future...

For most people to be wrong is a worry, particularly as the number of people living together (cohabiting) rather than marrying continues to increase.

The 2001 Census recorded just over two million cohabiting couples in England and Wales, a 67% increase from 1991. The number of children being born to cohabiting couples in England and Wales has also risen. In 1970, fewer than 10% of births were to unmarried parents. By 2004, the figure was 42%.

As cohabitation has increased, so has its public acceptance. 67% of respondents to a survey in 2000 agreed that it was "all right for a couple to live together without intending to get married".

So what's the problem?

The problem is that the legal positions of unmarried and married couples are very different. It's worth mentioning Civil Partners here. Civil Partners are same sex couples who have gone through a ceremony that is similar to a civil marriage, with the result that their rights are similar to those of married couples. However heterosexual couples can not register as civil partners.

To look at the pitfalls, let's invent Harry and Sally. When they met 10 years ago Harry had just set up his own firm and Sally was an accountant. Harry already owned a property and Sally moved in. Her income helped them through the early years of the business and Sally stopped working 4 years ago when their son Harry Jr was born. She looks after Harry Jr and his sister Molly full time. Harry's business has done well.

Unfortunately Sally has found out that Harry is having an affair. She wants to leave but wants to know what her rights are.

Sally could well find that the advice she gets is disappointing. She is likely to be told that she will find it very difficult to make any claim for a share of the house which is in Harry's name. Although she might be able to stay in the house to look after the children, the house would go back to Harry once the children were grown up. Paying the mortgage would be a problem because Sally would have a restricted right to claim maintenance for the benefit of the children. She has no claim against the pension into which Harry has paid large amounts and she is unlikely to have any claim for a share of the business.

If she and Harry had been married it would have been so different. A court could order that the house or a share of it is transferred to her or that Harry pays her a lump sum. Sally could claim maintenance from Harry. A court could order that a share of Harry's pension was transferred to Sally and a court could consider the value of the business when deciding what share of the assets Sally should have.

The big difference is that on divorce a court has to determine what is fair. On separation of an unmarried couple the court does not have the power to divide things fairly. It has limited powers to protect children and otherwise relies on trust and property law.

It's not all good news for Harry. He finds that since his name wasn't put on the children's birth certificates, he doesn't have Parental Responsibility (PR) for Harry Jr and Molly and can only get it with Sally's agreement or a Court order. PR doesn't affect the arrangements for the children (and Harry is still liable for child support) but without PR the doctor might say that he can't give Harry information or the nursery might not give him a report.

Even with a happier ending there can be pitfalls. If Harry and Sally stay together then they need to have Wills because otherwise they will not inherit from each other. Even with Wills they will need advice about tax planning because while transfers between spouses are exempt from Capital Gains Tax and Inheritance Tax, transfers between partners are not. The recent changes to Inheritance Tax help married couples, not cohabitants. Sally and Harry could also consider a cohabitation agreement setting out the financial arrangements between them.

The future

The Law Commission (which makes recommendations to the government about changes to the law) published a report on this issue last year. It recommended that some financial claims should be possible (though not the same as on divorce) if the parties had a child or had lived together for a minimum period of 2 to 5 years, provided one partner had made a significant contribution to the relationship that left them out of pocket (or benefitted their partner). In March the Government decided to defer any decision and no change is likely to happen before 2012.

Advice and help...

The Living Together campaign funded by the Ministry of Justice has an excellent website with advice about all aspects of living together
www.advicenow.org.uk/livingtogether

Solicitors specialising in cohabitation law can be found at www.resolution.org.uk