The coronavirus pandemic has seen many marriage or civil partnership ceremonies postponed. A survey by the wedding planning website Hitched found that 71 per cent of couples had postponed their weddings rather than proceed with just a handful of guests.
‘Despite the range of options nowadays, many couples prefer not to formalise their relationship’, says Annaliese Barber, Solicitor in the Wills, Trusts, Probate & Court of Protection team with Richard Reed. ‘But they will not be as well protected as they would be if they were married or in a civil partnership. In such cases, it is important that couples ensure they plan accordingly for themselves and their partner in later life.’
Our previous article focused on the implications of marital status on making a will but in this article, Annaliese outlines some of the other issues which you need to consider as part of lifetime planning.
Later life, financial management and mental capacity
Regardless of marital status, no one can access your sole financial accounts unless you have specifically granted authority for them to so, such as under a power of attorney. In this scenario, it would be a Lasting Power of Attorney for Property & Financial Affairs.
It is advisable to consider making a Lasting Power of Attorney for Property & Financial Affairs when you have the mental capacity to do so.
However, many people find themselves caring for a loved one who has lost mental capacity and unable to make a Lasting Power of Attorney. This leaves the carer without any authority to deal with the incapacitated person’s affairs.
If this is the case and the incapacitated person’s affairs need to be dealt with, then an application will need to be made to the Court of Protection for someone to be appointed as the person’s Deputy.
Before making such an appointment, the Court of Protection will require sufficient evidence that you are the most appropriate person to be appointed as Deputy. For many cohabiting couples, this can be trickier to establish than for those who are in a legally recognised union. It is even more important for someone who is cohabiting to take steps to protect themselves in the event of lost capacity by making a Lasting Power of Attorney whilst they can do so.
Next of kin and health decisions
In English law, there is no legal definition of the term ‘next of kin’ and it can refer to anyone you would like it to be. It does not have to be a relative, it can also be a close friend for example.
Couples who are cohabiting and not in a legally recognised union could therefore be in a situation where medical decisions are made on your partner’s behalf without your involvement.
To overcome this, cohabiting partners can also make a separate Lasting Power of Attorney to appoint each other for healthcare decisions. This is known as a Lasting Power of Attorney for Health & Welfare. Obtaining professional advice will help you to ensure that all necessary authorities are adequately granted under the Lasting Power of Attorney.
Assets outside the estate
When it comes to how your estate will be dealt with after you have died largely relies on your Will or on predetermined intestacy laws (known as the intestacy rules).
Many people assume that when they have cohabited for several years they are classed as common-law spouses and have the same rights under the intestacy rules. This is not the case as there is no such concept in English law and a cohabitee will not benefit from an estate under the intestacy rules.
However, some assets pass without reference to a Will or the intestacy rules. Instead, the person who inherits these assets is determined by the nature of the asset itself.
- Property owned as joint tenants passes to the surviving owner, no matter the relationship. Therefore, if you buy property as a cohabiting couple and own this as joint tenants, the survivor will be entitled to the whole of the property when one of you dies. However, owning property as joint tenants may not be suitable during your lifetime, for example if you have contributed different amounts to the purchase price. You should always seek expert advice on the overall legal implications.
- Occupational pensions and death-in-service benefits may be determined by the pension trustees. Whilst it may be easy for the trustees to decide that a spouse or civil partner should receive these funds, if you are a cohabiting couple it could prove more difficult for the trustees to establish that payment should be made to your cohabitee. Couples in this situation should speak with their pension providers about nominating each other as their chosen beneficiary. You should also seek legal advice as to the full implication of any such nomination.
- Life policies and other sums written into trust during your lifetime will be paid directly to the beneficiaries of the trust by your trustees. Before making a lifetime trust, it is important to obtain advice on the legal and tax implications.
If you are a cohabiting couple, you should seek legal advice to ensure that you have put in place the best lifetime planning possible in light of your circumstances.
How we can help
We are highly experienced in all aspects of lifetime planning and can advise you on your particular circumstances, ensuring you and your partner are protected no matter your marital status.