Unmarried couples: your legal rights
For unmarried couples, the question of where your relationship stands in the eyes of the law can be a troubling one, more so than ever when children come into the equation.
You're either married or you're not
Marriage is a contract entailing benefits and liabilities not automatically applicable to unmarried couples.
If you are not married, there are, however, a few steps you can take to better protect yourself, your partner and any children you may have.
(Non-)ownership of property
To start by dispelling an urban myth; there is no such thing as a 'common law spouse'. You can live with someone for 50 years, but unless you are married you are not entitled to anything purely on the basis that you live together.
If you are not on the title deeds of a property, you do not gain a beneficial interest in it simply because you live there. If the person who owns the property asks you to leave, you have no legal right to stay in the property (unless you have a tenancy agreement).
In the absence of an expressed declaration in a deed or other document, a non-legal owner may acquire a beneficial interest by way of a constructive or resulting trust.
- A resulting trust can be found to exist by reference to the contributions made to the property, invariably at the time of purchase. The contributions will nearly always result in a corresponding beneficial interest (so if you put in 60% of the purchase price and your partner the remaining 40%, you will be deemed to hold the beneficial interest in those shares).
- A constructive trust may be established if the non-legal owner has been promised an interest in the property by the legal owner, or there is some kind of 'common intention' and they acted upon that promise to their detriment, eg investing money in the property for construction work. The common intention can either be at the time of purchase or subsequently. It is not necessary to have an explicit conversation about the beneficial ownership. The Court can also look at the conduct of each of the parties and imply that the parties had a common intention.
Jointly owned property
There are three ways to own a property jointly. Before going into them, the following definitions may be helpful in understanding the options.
- Equity – the amount of money that would be realised if the property was sold. This can be calculated as follows: the value of the property less the mortgage and the sale costs (usually between 2% and 3% of the property's total value).
- Legal interest - this is who is on the title deeds.
- Beneficial interest – this is how the equity is held - so just because one party is the legal owner doesn't mean the other party can't establish an interest in the proceeds of sale. That interest is called the beneficial interest (as opposed to a legal interest).
A couple wishing to purchase a property together can be:
- Joint tenants – this means owning a property in its entirety, so two owners would have a 50% share each, or four a 25%, and so on. It further means that in the event of one of the owners dying, their share passes to the remaining owner(s). This is regardless of what the deceased may or may not have put in their will. It is very easy to sever the tenancy; in which case you would then hold the beneficial interest as tenants in common in equal shares (see below).
- Tenants in common in equal shares – this does exactly what it says on the tin; you hold the beneficial interest in equal shares. So if there are two owners, you hold a distinct 50% of the equity. This means that upon your death, your specific share would go to whomever you name in your will.
- Tenants in common in unequal shares – This is the same effect as number two, but instead of 50% you would get whatever percentage you hold. For example, if you buy a property for £250,000 with your partner, paying £60,000 and them making up the balance towards the purchase price, with a £150,000 mortgage, you may want to consider holding the beneficial interest 60/40 in your favour. This means that when the property sells, you would receive 60% of the net proceeds of sale (ie the equity).
If you own a property jointly and declared how to go about owning your beneficial interest, then, in the absence of fraud, mistake or evidence of a subsequent agreement, you will own the property in accordance with that declaration.
If you have purchased your property after 1 April 1998, the transfer document, called a TR1, will contain an express declaration of your beneficial interest, provided you ticked the right box (and unfortunately if you haven't, there is nothing you can do about this retrospectively). You may also have signed a separate document, either at the time of purchase or subsequently, called a Deed of Trust.
If there is no express declaration of your beneficial interest, the starting point is to assume that you will be equally entitled to the equity. The Supreme Court has, however, decided that where it is not possible by direct evidence or inference to ascertain your intentions, they can decide your shares by looking at what they consider to be fair. Financial contributions are relevant but there are many other factors the Court may take into account, for example behaviour/conduct of the parties such as one party moving out for a long period of time or paying significant amounts off the capital element of a mortgage.
If you currently own your property as joint tenants you can consider severing the joint tenancy. This can either be by agreement or unilaterally by serving notice on your co-owner, but take legal advice to avoid creating a Deed of Trust that is not in your best interests.
Cohabitees do not automatically inherit from one another under the rules of intestacy. Therefore the only way you can provide for a cohabitant on death is to make a will.
Gifts on death to a cohabitee are not exempt from Inheritance Tax (IHT) as they would be if you were married. If you want your assets to pass in their entirety to your cohabitee on your death without having to pay Inheritance Tax, this can be achieved in relation to real estate, because you can hold the property as joint tenants. This means that the property passes to the survivor in its entirety outside of any provision in a will.
All assets will normally be subject to IHT. While cohabitees do not automatically inherit if a partner dies intestate (ie without making a will) the surviving party may be able to argue they are a 'maintained person' pursuant to the Inheritance (Provision for Family and Dependents) Act 1975.
Capital Gains Tax is also payable in respect of transactions between unmarried parties. This is a tax on the profit when you sell or give away something (an 'asset') that has increased in value.
A married couple getting divorced can transfer real estate between themselves without being liable to pay stamp duty. This is unfortunately not the case for the transfer of a property between unmarried parties, who would be liable to pay stamp duty on that transfer from their joint names into one party's sole name.
The amount of stamp duty will depend on the value of the property at the date of transfer and does not include any deduction for the mortgage.
If you are not married then you need to check with your pension provider what, if any, provisions they will make for a cohabitee in the event of your death.
This would include death in service benefit or pension income for your partner in the event you predecease him or her while your pension is in payment.
Ascertain the position and, if possible, consider nominating your cohabitee as the person to receive those pension benefits.
Children and parental responsibility
The law relating to children is the same whether parents are married or not, including with respect to Child Maintenance. The main piece of legislation here is the Children Act 1989.
What is parental responsibility?
- Parental responsibility (PR) is the term used to describe the legal duty of care a parent has to his or her child.
- PR does not affect day-to-day care of the child, so you can have contact even if you don't have PR.
- The main areas that PR will cover are medical treatment, education and religion. So, if you have PR, you have an equal say in which school the child attends, what medical treatment is provided and which religion the child is brought up in etc.
Who gets Parental Responsibility?
- All mothers except those in a same-sex relationship who are not the child's biological mother and didn't give birth to them*.
- All married fathers not in a same-sex relationship*.
- Unmarried fathers who are named on the birth certificate, if the child's birth was registered after 1 December 2003.
- Anyone who has a Residence Order in favour of a child.
- Anyone who has entered into a PR agreement.
- Anyone who has a Parental Responsibility Order.
*Same-sex couples or anyone who went through an assisted pregnancy, eg surrogacy, egg donation etc, should seek specialist legal advice as to whether they have PR.