Civil bond has its perks
FIVE-MINUTE GUIDE TO... THE NEW LAW FOR COHABITATION
IN JUST two days, opposite-sex couples will be able to register a civil partnership for the first time and win attractive financial perks and better protection in case of break-ups or death.
The right to register a civil partnership had been reserved for same-sex couples but now it will be extended to all.
The move follows a Supreme Court ruling and comes at a time when Boris Johnson is the first Prime Minister to enter 10 Downing Street in a cohabiting relationship.
This allows heterosexual couples who do not want to get married to put their relationship on a firmer legal footing, handing them tax, inheritance, pensions and next-of-kin benefits.
CIVIL RIGHTS
The number of cohabiting couples has jumped by a quarter in the last decade, to 3.4 million.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said cohabiting couples can face serious problems when one partner dies without leaving a will, as the other is not recognised under intestacy rules: “They could get nothing, no matter how long they have been together.”
If the home was in the deceased partner’s name only, that passes to their children. “If they have no children, everything in their name passes to their parents,” she added.
Legally, cohabiting couples have no financial obligations after they separate. So if, say, the mother sacrifices her career to raise children, she still has no right to receive spousal maintenance after a break-up, though the father may have to pay child maintenance, Coles said.
Civil partners can pass assets such as savings, shares and property between themselves without triggering a capital gains tax charge but cohabiting couples cannot do that.
Some occupational schemes will only pay a survivor’s pension to husbands, wives and civil partners, so that long-term unmarried partners receive nothing,
Coles warned.
Again, registering for a civil partnership can resolve this.
CLAIM BENEFITS
Jenny Walsh, a wills and probate solicitor at London law firm Osbornes Law, said it can also bring a huge inheritance tax (IHT) break.
Currently, married couples and civil partners do not pay IHT on assets they pass on to their spouse when they die, but cohabiting couples may pay IHT at 40 per cent on assets above £325,000.
Walsh said those who own a property with their partner should seriously consider getting married or entering into a civil partnership: “Then if the worst happens you will not have to sell your home during an already difficult time.”
Stowe Family Law managing partner, Naheed Taj, said: “The children of cohabiting couples do not get the same security or legal protections as those of married couples or civil partners.”
In some cases, a father would not automatically have responsibility for his children if the mother passed away, unless, say, his name is on the child’s birth certificate.
Civil partners can also claim the marriage allowance, a tax break worth £250 per year where one partner pays tax at the basic rate and the other has unused tax allowances.
They can also claim bereavement benefits for working age couples, if one of them dies under pension age.