Many believe that if they live together long enough, they become married in common law. This is not the case.
So what happens if you are not married or in a civil partnership, and your other half dies? Although discussing future inheritance can be uncomfortable, a sudden bereavement can turn your life upside down in more ways than one.
And if you are unaware of your rights in law, it can turn an emotionally devastating time into a demanding and stressful legal exercise.
Here are three case studies that we have come across in our work (names & identifying details have been changed to preserve client confidentiality):
2FA5C31. Jane and Stephen – living together after divorce
Jane and Stephen met in their fifties, having both been married before. Both of them had adult children. Stephen had been renting since his divorce, but Jane owned her own house.
When Stephen moved into Jane’s house, the subject of sharing or shifting ownership never came up. Stephen contributed to the remaining mortgage and paid for some major additions and renovations, including a loft conversion and a conservatory.
Neither Jane nor Stephen wanted to marry again, after their divorces. They believed that after 7 years of living together they were classed as common law married.
When Jane died suddenly and unexpectedly in a car accident at only 63, Stephen realised that they had not made Wills and therefore Jane’s entire estate went to the laws of intestacy. Her entire estate – including the house that Stephen lived in – was left to her adult children. Stephen had to vacate his home and was not entitled to any recompense for his contributions to the mortgage or his expenditure on home improvements.
2. Mike and Martha – lifelong partners
Mike and Martha met at university and drifted happily into living together. The question of marriage came up from time to time, but Martha never felt it was the right time – they were saving to buy their own place; she was pregnant; she had just had another baby. It just always seemed there were more pressing demands on their time and money than organising a wedding!
And when Mike was diagnosed with a brain tumour, they had a lot more to worry about than making Wills. Besides, they’d been together for twenty years and had three children under the age of eighteen, so surely the question of inheritance was straightforward?
But like many people who believed that living together and having children together conferred legal status to their relationship, Martha was unpleasantly surprised when Mike died.
The good news was, their house was in owned as beneficial joint tenants. This meant that the whole of the house passed to Martha, as she was named on the title deeds.
But the rest of Mike’s estate – including all his savings, pension, life insurance, cars, and even the watch that Martha had given to him – were automatically put in trust for his children until they came of age. As Mike had been the major breadwinner, this left Martha extremely short of funds with which to cover the costs of raising their children – and paying the mortgage – alone.
3. Mary and Sheri – exposed to inheritance tax
Mary and Sheri planned carefully for their future and made mirror Wills, leaving their entire estates to each other. This avoided any intestacy problems or disputes after their death, and made the process of obtaining Probate relatively straightforward.
However, because they were not married, even though they both believed they were common law, when Sheri passed away her Inheritance Tax allowance of £325,000 could not be transferred to Mary. As Sheri had a considerable amount in property and investments, Mary was faced with a substantial IHT bill.
With careful estate planning and the creation of trusts, this situation could have been minimised.