Wednesday 04 April 2012

On 14th December 2011 the Law Commission published its report “Intestacy in Family Provision Claims on Death”.  The report includes two draft bills to amend the law of intestacy in England and Wales, in particular to give some cohabitants the right to inherit from their deceased’s partner’s estate.  Two million cohabiting couples would be affected by this legislation and as a result,  could benefit financially by being treated as if they were married.

At a time when controversy is raging about same sex marriage, this proposal is receiving little attention – but it is just as much a sign of a shift in our cultural attitudes. The Law Commission held a lengthy public consultation before drafting its recommendations and also conducted a survey or public attitudes towards inheritance.  It found that the existing legislation is “outdated, confusing or places unnecessary obstacles in the way of those with a valid claim to share in a deceased’s person’s assets”.

The Commission recommends that cohabitants who have lived together for a continuous period of five years should have the same entitlement as a spouse. Those who have lived with each other for two years and have had a child together should also inherit as if they were married.

Up to half of those dying in England and Wales each year do not leave a valid Will, i.e. they die intestate.  Currently an unmarried partner will not inherit anything at all if their partner dies intestate.

What this means is that a couple who have children and are unmarried may face a deeply traumatic situation if one of them dies.  The deceased’s partner’s estate will pass directly to his or her children.  Their surviving partner, in order to gain a share of the estate, has to make an application under the Inheritance (Provision for Family and Dependents) Act 1975.  An application can be made on the basis that the estate does not make ‘reasonable financial provision’ for the applicant. In many cases the court’s approach has been to treat applications from cohabitants very nearly as generously as those from spouses, in terms of granting financial provision from the deceased’s partner’s estate.  But the fact of the matter is that cohabitants must litigate in order to be awarded any provision and they will have to sue his or her own children in order to bring the claim.

Generally the claim must be brought within 6 months of the date of probate being granted and this can put a huge amount of pressure on a bereaved partner, at what is often the most stressful period of their life.  Of course bringing an application to court under the Inheritance Act also involves incurring legal costs – because every family’s circumstances are different and the amounts of money involved vary, it is often not easy to assess the value of a claim and to balance out the financial needs of all the parties involved.
If the two draft bills (the Inheritance and Trustees Powers bill and the Inheritance (Cohabitants) bill) do become law then there will have been a very important step taken towards recognising the so called common law marriage myth.   It is yet to be seen whether the transferable nil rate band for inheritance tax  – that is available to spouses only at the moment –  will also be applied to the proposal.

It could be argued that couples who choose not to marry, do so in the full and certain knowledge that they are not going to benefit from the protection that the law affords to married couples.  To impose legislation that takes away that freedom is arguably an interference with that freedom.

On the other hand, we rarely enter into relationships considering what might happen if we die or our circumstances change; as evidenced by the fact that so few of us make a Will. To change the law to alleviate distress and financial hardship to cohabitants must surely be a social good.

If you are seeking to bring or defend an inheritance dispute Sarah Young, Partner at Ridley & Hall is a member of both Solicitors for the Elderly and The Association of Contentious Trust and Probate Specialists (ACTAPS) and can offer sensitive, practical advice on the often complex issues that can arise. Call Sarah Young on 01484 538421 or email: sarah.young@ridleyandhall.co.uk