Cohabitation, Wills and reasonable provision

Living together with a partner can be full of companionship, excitement, fun, frustration, and exhilaration in equal measure. Amongst the practicalities of how to split bills, and how to divide the jobs around the house, thinking about the legal status of being a cohabitant probably isn’t at the top of the ‘to-do’ list.

Common law spouses – A common misconception

A common misconception is the idea that people who live together, especially those who have lived together for a long time, are ‘common law’ spouses. This is the belief that, even though not legally married, a long-term cohabiting couple has a legal status similar to that of spouses, the assumption is that they would be treated like a spouse in the event of a death.

The reality is that common law spouses do not exist. If you are not legally married, then the person you share your life with is not your spouse; the law treats them very differently to a husband, wife or civil partner.

Cohabitants and inheritance

One key way in which cohabitants are less favourably treated is that the law does not recognise them as someone who should automatically benefit from their partner’s estate if they die.

A cohabitant can be provided for in a Will that sets directions for the provisions for the co-habitant very clearly, but what happens if there isn’t a Will?

A cohabitant’s claim

Although the law treats cohabitants differently and, overall, less favourably than spouses, cohabitants do have some important rights upon their partner’s death. These rights, particularly in relation to inheritances, are often overlooked.

If a couple has been living together for more than two years prior to death, they fall into a class of people who can bring a claim[1] against a deceased’s estate if there is no Will or a Will does not make provision for them.

Even if there was a purposeful choice not to include a cohabitant as a beneficiary of a Will, a cohabitant can claim against a deceased’s estate for provision to be made for them.

A salutary lesson

The recent case of Thompson v Raggett provides a useful reminder of the importance of cohabitants carefully considering the potential for their partner to make a claim through the Courts to receive provision from their estate.

In this case, the deceased, 92-year-old Wynford Hodge, made an active decision not to provide for Joan Thompson, his cohabitant of 42 years. Mr Hodge’s estate was valued at over £1.5million and he had set out clear wishes as to how his funds were to be distributed in the event of his death. However, failing to consider the needs of 79-year-old Joan has led to the alteration of Mr Hodges’ Will by the Court to provide Joan with an outright inheritance of over £410,000. This was despite Mr Hodge’s recognised intention to avoid funds ultimately passing to Joan’s children from a former relationship on her death.

Due to the nature and extent of her successful claim, Joan is now free to use and dispose of the assets the Court has ordered she receive as she sees fit. The likelihood is that her children will have at least some benefit from Mr Hodge’s funds despite his clear wish to avoid this.

So what could have been different?

If Mr Hodge had received full advice, the situation could have been very different. When considering a Will, it is important that a testator (the person making a Will) receives advice about not just what they want to achieve in terms of providing for people, but also about a cohabitant’s ability to bring a claim against an estate if there is insufficient provision made for them. Advice will then centre on how the Will can, and should, be structured to protect assets best, avoid a claim and still make provision for the people the testator intends to receive from his estate.

Had Mr Hodge been aware of the extent of Joan’s ability to make a claim against his estate, and the variety of options available to him as to how he could provide for his chosen beneficiaries, then he may have prepared his Will differently. He could have incorporated trust structures, which leave sufficient provision for Joan to either avoid her claim for additional provision completely, or at least significantly limit the nature and scope of any possible claim from Joan.

Mr Hodge could have made ‘sufficient’ provision for Joan during her lifetime, such as making sure that she had a roof over her head and funds to spend to maintain the lifestyle they had together before his death. However, he could have structured his Will in such a way that, on Joan’s death, the underlying capital of his estate, that Joan had been able to receive an income from or live in, was able to pass to his chosen beneficiaries, and would not be part of Joan’s own estate to distribute under her Will or intestacy.

The benefit of this approach isn’t just protecting the overall distribution of Mr Hodge’s assets; his estate would also have benefited from significant savings on legal costs and a speedier estate administration. His chosen ultimate beneficiaries would also have known exactly where they stood for the future and would have been able to rely on their position, avoiding unnecessary stress and emotional cost.

This case is a salutary lesson for cohabitants making a Will. It's a useful reminder not just to consider who an estate is to pass to on death, but how to make provision for people in different ways, to find the best way the achieve their overall intentions.

Preparing Wills for cohabitants

Wills are important for everyone to consider and, once made, to keep regularly updated. Where people’s personal circumstances are not entirely straightforward, it is particularly important to ensure that the way in which a Will is prepared seeks to protect against possible claims against the estate,  as well as being clear on who is to inherit.

Separating out who can use assets (e.g. live in them rent free) or receive an income during their lifetime, from who will ultimately receive the capital (and leave it under their own Will), can be a really useful way to consider how to distribute assets upon death. Planning this carefully in a Will can save a lot of heartache and cost down the line.

Further information

If you have any questions surrounding the issues raised in this article, get in touch with Donna Holmes.

[1] A claim would be brought under The Inheritance (Provision for Family and Dependants) Act 1975.