Difficult Conversations - to marry? or not?

New Blog Series: Difficult Conversations; a series in which our Melinda Giles speaks about the difficult conversations that are good for our legal health.

Shall we get married for tax and legal reasons?

For the first time, there are more young couples choosing to live together without a marriage or civil partnership. These 2 forms of legal recognition of a romantic relationship are treated equally in the law and by HMRC, but co-habiting is not.

I think it is important to have that conversation; after all, if you love each other and want to set up home together and spend your life together, isn’t it important to know how each other would be looked after if disaster struck? Would you buy a property that you love without having a survey? Or insuring it? Best to know where you stand?

There is no such thing as a common-law spouse. Even if you have lived together for 25 years and have 25 children. The possibilities are that you would have no financial or legal rights if they died or left you. These are the difficult conversations here; and best to have at the time when you love each other and are not facing those awful life events happening.

Death: none of us want to face this. If your partner dies, without a will, then you are not entitled to any part of their estate. So, for example, if you live in a property owned by them, it will not come to you. If you have children together it will pass on to those children but if they are under 18 it will be in a trust. This is complex.

But you can make a will. And if you have children, or if you have stepchildren, this can all be covered. You don’t need to have the answers, you firstly need to have the conversation. Then make the will.

And you need to check any death in service benefits, or pension rights. Most companies allow these to be nominated rather than always automatically pass to a spouse. But you must check.

It is possible to go to court to claim a right to dependency if your partner dies and the estate falls into a children’s trust, or to your partner’s parents or brother for example (even if they have not spoken to them for 20 years). But making a will can avoid this trauma and cost at a time when you are grieving.

Unfortunately, we can’t change the way inheritance tax deals with death. Marriage or civil partnership gives full tax relief (and more if you also share children). But it is best to know the facts than not.

Break-Up: none of us want to face this either. But we are all realistic enough to know that it happens, sometimes. It is better to document how fair you want to be each other at the time that you move in together; even if the property is owned by one of you, you can have a Co-Habitation Agreement. Otherwise, you could find yourself homeless if the relationship breaks down despite all the promises that were made to you. Or you could transfer the property into shares or buy it together; document it in a Declaration of Trust. This will protect each of your interests.

Again, if you do break up having lived together for many years, it is possible to claim rights to property. There are too many legal angles to list here; it depends so much on what each party contributed, whether there are children etc. But they all require a legal challenge to get off the ground.

Unfortunately, again, we cannot change the fact that our tax rules do not give the same tax breaks on transferring property or ISAs etc.

And Finally, the law may catch up where co-habiting is treated equally to marriage or civil partnership in England, but until it does, if you do decide that you will tie that knot after all, you can always make a Pre-Nuptial Agreement for an element of certainty. Another difficult conversation worth having. And you should make a will, again.

Who said Romance was Dead?