The Myths of Common Law Marriage
Millions of couples live together without getting married and many believe that after a number of years together they become 'common law' husband and wife and are granted the same rights as married couples. Unfortunately this isn't the case and can lead to a lot of complications and heartache if one of them dies or they decide to separate.
Common law marriage is actually a myth and there is no such thing that carries any legal rights or responsibilities. Often people don't bother to check out the legal issues as it seems unromantic or distrusting but it is important to make sure you and your partner are covered in unpredictable circumstances.
TaxIf you are married then you are given certain tax exemptions but if you are living together as a couple then you are treated as two individual people in the eyes of the taxman. This means that you will be liable for some hefty taxes if you want to sell assets or leave them to each other when one of you dies. Captial Gains tax and inheritance tax are the two that apply and although you won't be able to completely avoid them, seek advice from an accountant about ways to lower your losses.
PensionsPensions haven't exactly been reliable anyway but if you are a cohabiting couple then you are in a vulnerable position. If you have a pension through work or a scheme that pays out to spouses in the event of a death then they rarely recognise live in partners. Also, if you separate you will have no right to a percentage of your partner's pension, however long you have been together.
SeparationIf you are married and get divorced then you have to divide your assets and are likely to be able to claim a proportion of the house and investments, even if they are in your spouse's name. However, if you are cohabiting then these laws don't automatically apply. If the house is in your partner's name, regardless of whatever contributions you may have made, then you will not be given a penny. However unromantic it may seem, it is important to be clear about these issues from the start and draw up a cohabitation agreement stating who gets what so you are both happy and covered.
WillsMany people assume that if you have been 'common law' husband and wife foe many years then the assets will automatically be transferred to you on your partner's death. Remember though, in the eyes of the law there is no such thing as common law marriage and therefore you have no rights to your partner's estate. Unless you draw up a will that clarifies who gets what then any inheritance will be passed on to the next of kin.
Cohabitation agreementTo make sure that your partner does not get left high and dry if you die or that you both are treated fairly in a separation, it is important to draw up a cohabitation agreement. It may feel like you are tempting fate and lacking romance, but there is nothing romantic about the law or being left without and money or a place to live. There are online forms you can download or contact your lawyer for advice.
Even if you live as husband and wife, unless you have that little piece of paper then the law does not recognise your commitment. It is a myth that cohabiting couples have the same rights as married couples and it is essential that you protect yourself and your partner by making plans and legal documents.