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The legal risks of being an unmarried couple - 5 tips for cohabiting couples
Research by the ONS in 2017 revealed that the fastest growing family type over a 20-year period was the cohabiting couple family, which more than doubled from 1.5 million families in 1996 to 3.3 million families in 2017 and represents 15 per cent of all families.
There are, however, a number of legal issues associated with being an unmarried couple and to help you advise customers in this situation, we’ve produced 5 legal tips (relevant for couples living in England & Wales only as the laws relating cohabitation differ in Scotland) to ensure cohabiting couples minimise the risks and protect their interests.
1. Make a will
One of the biggest advantages of being married is that when one spouse dies, the surviving spouse automatically inherits the deceased estate, even if he or she hadn’t made a will to name their spouse as a beneficiary.
In the case of unmarried couples, however, if one partner dies without making a will, the surviving partner won’t be entitled to receive anything and could be left in serious financial straits or even homeless. It’s therefore very important that cohabitating couples each make a will and keep it updated to specify exactly what they’d like their partner to inherit when they die.
In addition, parents whether married or not, can use a will to appoint a guardian who would be responsible for looking after any children aged under 18 in the event that both parents die.
2. Own your property as ‘joint tenants’ or ‘tenants in common’
By law, a married person is entitled to matrimonial home rights, which means their spouse cannot force them to leave the matrimonial home if the relationship breaks down.
Cohabitees don’t automatically have this protection, so should consider owning their home as ‘joint tenants’ or ‘tenants in common’ as this gives ownership rights to both partners. As joint tenants, the couple will own the property equally; whereas with tenants in common, it’s possible to own a specific share of the property, so for example, one partner could own 60% and the other 40%.
Joint tenants own the property equally, so if one partner dies before the other the surviving partner automatically gets sole ownership of the property. In the case of tenants in common, the surviving partner will only be entitled to the other partner’s share in the property if a will has been made expressly gifting that share of the property to them.
3. Make a cohabitation agreement
When a couple are married, they legally jointly own their assets and financial responsibilities and if they split up, there is legislation to determine how the financial matters are dealt with.
For unmarried couples the situation is not so clear cut. To avoid future disputes, it’s important that there is clarity regarding the responsibilities for day-to-day finances like paying the mortgage or rent, utility bills or council tax, as well as the ownership of belongings, such as furniture and other household effects.
Creating a cohabitation agreement is a useful way for unmarried couples to set-out a number of aspects of their relationship, including the ownership of property, arrangements for children and how general household expenditure will be dealt with. Equally importantly, a cohabitation agreement allows couples to specify how they would want their assets to be divided should they separate and, in the event of a dispute between the couple, this agreement will be taken into consideration by the courts.
4. Make a power of attorney
Powers of attorney allow an individual to nominate one or more people to look after their finances or general wellbeing in the event that they become unable to do so themselves, typically through an illness such as dementia or a debilitating accident.
Though more commonly drafted by elderly parents to give authority to one or more of their children to look after their affairs, a power of attorney can be used in a number of other situations. For cohabiting couples who face more hurdles in accessing their partner’s finances in an emergency, these documents are useful in enabling them to protect each other’s interests should the need arise. Through a power of attorney, one of a couple can be given authority to access the other’s bank account and pay bills, for example and also make decisions about the sort of care their partner should receive.
5. Ensure the father of any children has parental responsibility
‘Parental responsibility’ allows an individual to make decisions about all aspects of their child’s life and is automatically given to the child’s birth mother and her husband or civil partner.
However, unmarried fathers do not automatically have parental responsibility for their child, but can acquired it if they register the birth of child with the mother or enter into a parental responsibility agreement with the mother and register it at a court. Without parental responsibility, the father would not be entitled to have a say in any aspect of their child’s life.
As the above shows, the legal rights of cohabiting couples are not straight forward and there are other aspects - inheritance tax, for example, where cohabitees are not afforded the same allowances as married couples – that need to be looked into. We, therefore, always recommend that people in this situation get expert legal and financial advice to ensure their interests are protected if one partner dies or the relationship breaks down.
So, is there anything brokers can do to help cohabiting employees understand and mitigate the risks of being an unmarried couple?
ARAG’s Family Legal Solutions includes a Consumer Legal Services website which provides a convenient and easy way for unmarried couples to not only get to grips with the laws affecting cohabitation, but also to prepare a range of important legal documents. Easily accessible online, the service includes customisable wills, powers of attorney and cohabitation agreements, which policyholders can conveniently prepare from the comfort of their own homes and ensure their interests are protected.
Disclaimer - all information in this article was correct at time of publishing.
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