ASK A FAMILY LAWYER
Each week, Stowe Family Law solicitors answer readers’ questions on different legal issues. Jane Gray, a solicitor based in our Hale office, tackles this week’s topic.
“My fiancé just passed. We have a son and have cohabitated for the past four years. Last year we bought a house. The deed is in his name and as far as I know my name is not anywhere on the mortgage. We had quite a few assets that have sadly been taken from my son and I. I don’t want to lose our house too. We paid the life insurance policy on our house for this reason exactly and now his ex-wife and parents are desperately trying to take it. What can I do?”
Most couples now live together before, or as an alternative to marriage. Living together is seen as the basis of a commitment towards a future together. Couples tend to prioritise saving to buy a property ahead of saving to get married.
Between 2004 and 2016 the Office of National Statistics reported that cohabiting couples were the fastest growing family type.
It is really important for these couples to safeguard each other because the law offers no statutory rights to an unmarried partner in the event that one partner dies. If they did not leave a valid will their estate will pass under special rules set out by the government called the Intestacy Rules.
Under the current form of these, an unmarried partner (including a fiancée) has no statutory right to any share of the deceased partner’s estate. Where property is occupied by an unmarried couple but has been purchased in the sole name of one of them, the entire value of the property will strictly belong to that person alone unless there is an underlying document stating otherwise. That means that in the event of the owner’s death, their property, along with any money in their sole name and life insurance, will pass to their blood relatives under the Intestacy Rules. This can result in the forced sale of the family home making a partner/fiancée homeless. What is ironic in these situations is that often both parties decide to set up life insurance as part of the mortgage application, thinking that this will offer some protection. In reality, life insurance is just regarded as an extra payment due to the blood relatives on ‘intestacy’ (death without a will) – unless it was taken out in the couple’s joint names, or gifted into a special trust for a chosen individual or individuals.
The other important point here is that often couples who are registered as joint legal owners of a property may assume that if one party dies the survivor will inherit automatically. This is not always the case. In England there is a distinction between parties who own the equity in a property jointly as joint tenants and parties who own the equity in a property jointly as tenants in common.
Joint tenancy creates an equality of interest and means that if one owner dies the surviving owner will automatically inherit the deceased’s share. This will pass outside any valid will or if there is none, the Intestacy Rules. In the case of tenancy in common however, it is possible for one owner to have a greater or lesser share than the other co-owner. If the parties hold as tenants in common and one party dies then the other joint owner has no entitlement to their partner’s share. This will pass to his/her blood family under the Intestacy rules.
It is vital therefore to ensure that whatever can be done to protect the family unit is done during your lifetime.
Here are some practical pointers for all those couples who decide not to marry or who have not yet tied the knot:
- Make sure you make a will so that you choose where your money and property goes. Don’t rely on what you think might happen.
- If you buy joint property be aware that there are two ways of holding property jointly. Don’t assume that because you own property jointly with your partner that it will automatically pass to them on your death. Get advice on the type of joint ownership you have. Remember if you own as tenants in common then there is no protection for the survivor.
- If you take out life insurance, for example as part of buying a house, be very careful to get advice on where the proceeds would go. Often parties assume that it will pay off the mortgage but it is very rare these days to see life cover formally assigned and linked to the mortgage account. Take note of who is named as the life assured and take advice upon placing life cover in a lifetime trust for the benefit of a partner/ children.
- Make sure that you notify your pension provider of your wishes for any lump sum payment due on death. Pension proceeds will usually pass under the discretion of the provider rather than strictly under the terms of your will.
- Make sure you notify your provider of any ‘death in service’ benefit from your employer (i.e. a lump sum payable to your family if you die while employed). This again will be a payment likely to pass by discretion. Make sure you contact them to notify the trustees of the scheme of your wishes.
- Take inheritance tax advice. This is not favourable to unmarried partners. Take advice on the best will structure to put in place to protect your partner and any children you both have. Be aware that inheritance tax will be levied at 40 per cent based upon a deceased chargeable estate over and above the nil rate threshold which is currently £325,000. Be aware that there is new legislation coming in to provide additional allowances if qualifying property passes to your children. This allowance can be lost if advice is not taken in the drafting of a will.
For those who are left in a position where it is too late and the planning was not done then I would consider the following points:
- The Inheritance (Provision for Family and Dependants) Act 1975 provides a partial remedy for a surviving unmarried partner if he/she was, immediately before the death of the other party, being maintained by their partner. The survivor can apply under the act for reasonable maintenance.
- If the survivor was helped with the purchase price of a property held in their deceased partner’s name or made financial contributions towards it they could apply to the Court for a declaration that a special trust arrangement in fact operates over the equity in the property, in order to reflect that contribution. A similar order can also be made by the Court if there is evidence that both parties intended the underlying equity of a property to be held in certain proportions. The Court will require evidence in each case.