Only accounts and financial products held in both names will usually be considered to be joint.
Anything that is solely in one name or the other can leave couples with few rights or protections in the event of a break-up.
While the myth of common law marriage is pervasive, it doesn't have any legal reality in England and Wales.
Money rights when cohabiting
Many cohabiting couples will choose to keep their finances separate when they move in together.
This might keep things simple and ensure a legal separation between the two, but it does mean rights are limited. For this reason, some cohabiting couples may decide to open joint accounts or have joint financial products.
However, for those who do decide to go down this route, there are some important factors to consider such as liability if things go wrong.
Banking
As might be expected, non-married couples who keep separate bank accounts have no right to access the money in the other's account.
If one partner dies while the couple is cohabiting, any money in their accounts will go into their estate and can't be touched by the surviving partner until the estate is settled - even if there a will in a partner's favour.
Things become even murkier with shared accounts.
Usually if a relationship ends any funds in joint accounts are shared between both partners, irrespective of whether only one partner was paying into it. Yet if one partner never used the account at all, to either pay in or withdraw, they may have trouble claiming any rights to it.
If one partner dies and the account is in joint names, the other partner can continue to use the money in the shared account, though some of the balance is likely to be claimed as part of the deceased partner's estate.
Debt
Each partner is only liable for debts that are in their own name.
If the debt is in both names, however, both partners will be fully liable for the whole amount.
So, for example, if a couple took out a joint loan and one partner stopped making payments the other partner would have to repay the whole loan alone.
Couples that aren't married or in a civil partnership can still be financially linked if they share certain assets which means that one partner's bad credit can affect the other partner. There's more information on that in our guide on what to do if a partner or spouse runs up debt in your name.
In addition, when someone acts as a guarantor to their partner, for anything from a personal loan to a rental agreement, they will be liable for any debts run up by their partner.
Being a guarantor in any circumstances is a big responsibility as we explain in our dedicated guide on what's involved in being a guarantor.
Passing on a pension
Pensions were designed to provide for the wife if the husband died.
These days, the details of who the pension provider should pay out to if the policyholder die differ widely.
Some pension agreements state that only a legally married spouse will be able to claim anything from the pension or access a lump sum pay out in the event of a partner's death.
Other agreements will leave the decision to the discretion of the pension trustees, meaning someone else will have the final say and there's no guarantee it will be worked out in the surviving partner's favour.
However, many personal and private pension schemes will allow people to nominate beneficiaries in case of their death, regardless of whether they're married or not.
The take home is that couples who aren't married and don't plan to marry should stipulate who their pension should be paid out to in the event of their death.
In the case of a pension scheme with provisions for couples that are living together, this can be done through an "expression of wishes form", which states whom the recipient wants the pension to be paid to if they die.
And if a scheme isn't suitable to cohabiting couples, the person wishing to access their partner's pension benefits may be able to do so using the help of a trustee of the scheme or a union representative.
In terms of the State Pension, there are no provisions for inheriting anything as part of a cohabiting couple.
Property rights when cohabiting
Owning or renting property can be a thorny issue for couples.
It's worthwhile taking the time to understand what property rights and liabilities might be in play if you live together without being married or in a civil partnership.
When your home is owned
There are two situations that typically cause problems for unmarried couples that own their home:
- Partner A moves into a property already owned by Partner B, whose name is on the deeds. If the relationship breaks up, Partner A usually has no legal right to a share in the property (except in certain cases as we explain below).
- A couple has bought a home together. If they subsequently separate, the property will be automatically divided 50:50, regardless of how much each partner contributed.
So, it's usually much clearer if a couple has purchased the house jointly, although there are some situations where Partner A in our scenario above could have more rights.
Proving a contribution
Where only one partner owns the property, the non-owning partner may be able to obtain the right to live in the home, prevent their partner from living in the home or secure part of the proceeds when it's sold, as long as they can demonstrate that they've contributed to it.
For example, if the non-owning partner made all or some of the payments on the mortgage, put up some money for the deposit or paid for an extension to be built.
Couples with children
In the case of children, if a couple separates, one partner can ask a court to transfer the property into their name, whether the property is jointly owned by both or solely owned by the other partner.
This is only granted if the court feels it is in the best interests of the children and it is usually only done for a limited period of time, for instance until the youngest child is 18.
Cohabitation agreements
In both cases, these problems can be prevented from arising by putting arrangements in writing, as unromantic as it may sound.
By making it clear what the objective for ownership is from the outset, couples can avoid unnecessary extra heartache should they subsequently separate.
Cohabitation agreements, officially called declarations of trust, can cover anything from who put how much money into a property to supporting children.
Where one partner owns it could also include a clause the non-owning partners right to remain there if the relationship breaks down or the owning partner dies.
Once everything has been assigned to each partner's agreement, the couple can approach a lawyer to get the agreement properly drawn up, signed and witnessed.
If both partners each get their own legal advice on the agreement it prevents either one later claiming that they didn't agree to sign.
Rights when renting
Renters face similar problems to property owners when cohabiting.
If only one partner is named on the tenancy agreement the other partner has no right to stay if the relationship collapses, even if they've been contributing to rent.
With a joint tenancy agreement both parties have rights and most landlords will have no problem adding an extra name. In fact, most housing associations demand that partners planning to live together take on a tenancy as joint tenants.
If one partner in a joint tenancy decides to leave, they may be able to assign the tenancy to the partner that is staying.
Most council and housing association agreements will have a clause on the right to assign in the tenancy agreement. Private tenants have far fewer rights and are really at the mercy of the landlord.
For more on assigning tenancy see this really useful Shelter guide.
Should you get married for tax breaks?
Many cohabiting couples have no desire to get married, yet the Government does have a few incentives to encourage couples to tie the knot.
For example:
- Reduce income tax bill through the Marriage Allowance, saving up to £252 per year (this can be backdated for three years)
- Reduce inheritance tax bill as married couples aren't taxed up to 40% on inheritances over £325,000
- Reduce capital gains tax bill when transferring assets between each other
- Improve death benefits of some pensions (as discussed above)
Overall, the idea of saving £250 on tax breaks as part of the Marriage Allowance isn't an enticing reason to get married, even if backdating it for three years gets a £750 break.
Government figures published in August 2021 suggest 1.8 million couples are benefiting from extra tax relief.
It's worth applying if you're already married and worth doing if you do get married in the future. However, it's not a pressing reason to walk down the aisle.
One more point on the tax benefits of marriage mentioned above: most people aren't going to benefit from inheritance tax or capital gains tax breaks since they simply don't have the wealth for it become a factor.
Is common law marriage real?
Unmarried couples often believe that some sort of 'good enough' law exists to protect their rights should the relationship fall apart.
While cohabiting couples do have some limited rights, common law marriage is a myth that can lead to difficulties in the event of a break-up.
The British Social Attitudes Survey 2019 found that:
- 47% of people believe common law marriage "definitely" or "probably" exists
- This was only a small drop from the 56% who believed it to be true when the question was asked in 2000
- 49% of those living with a partner but not in a marriage or civil partnership believe common law marriage exists
So, the idea that we automatically have rights just by virtue of living with someone is a myth that carries on.
It means we need to consider things like finances, house ownership and tenancies before cohabiting, even if we do think that we might eventually get married.
Summary: Put things in writing
Government data shows there were 3.5 million cohabiting couples in 2020, an increase of 137% since 1996.
Despite efforts and initiatives to change the law over the years to reflect the fact more couples are choosing to cohabit instead of marrying, serious gaps in legal protections remain.
For anyone looking at cohabiting, bear the following in mind:
- Joint benefits and liabilities are only relevant if a couple has joint accounts
- If one person owns a property and the other person moves in, the owner usually retains all rights over the property
- Tenancies should be issued in joint names to avoid difficulties later
- Pensions must be checked to see if a partner can be nominated to receive any benefits after death
A cohabitation agreement can help to iron out some of these issues and set down in writing what both partners expect to happen in the event of a break-up.
It might not be the most romantic thing to think about, but it's worth talking it through and putting it into a legal document. If a partner is unwilling to do this, explore the reasons why to see if it's an issue that can be resolved.
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