How to protect yourself and your partner in later life if you are cohabitees
Despite the range of options nowadays, many couples also prefer not to formalise their relationship. However, they will not be as well protected so it is important that couples, in such cases, 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. In this article, I outline 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 granted authority to them, such as under a property and affairs lasting power of attorney.
While making a property and affairs lasting power of attorney is generally advisable, many people find themselves caring for a loved one who has lost mental capacity and without any authority to deal with that person’s affairs. When this happens, an application to be appointed as the person’s deputy is necessary.
Before making such an appointment, the court will require sufficient evidence that you are the most appropriate person. 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 while they are able to do so.
Next of kin and health decisions
Married couples and civil partners are afforded recognition as next of kin for medical purposes.
Couples who are cohabiting and who are not in a legally recognised union are not automatically considered next of kin and, as such, you could find yourself in a situation where health and medical decisions are made on your partner’s behalf without your involvement.
In order to overcome this, cohabiting partners can also make a separate lasting power of attorney to appoint each other for health and welfare decisions. 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 passed, this largely relies on your Will or on predetermined intestacy laws. 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, so 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.
For further information, please contact our Wills, Trusts and Probate Team on 01733 882800 or email [email protected].
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