| Financial services
We explain how the law works for those who cohabit or enter a civil partnership – and how things have changed for same-sex couples.
People these days have more choice over how they live. Some want marriage, others don’t, while some prefer a civil partnership. More than 2 million couples in the UK live together – or cohabit – without being married.
Things have become more inclusive too, with same-sex marriage now legal in all parts of the UK and civil partnerships available to everyone.
A civil partnership is a legally recognised union that gives people rights similar to those enjoyed through marriage.
Civil partnerships were originally set up for same-sex couples, but since 2019 (and 2021 in Scotland) they have also been an option for couples of the opposite sex.
Marriages involve making vows, and is ended by divorce, while civil partnerships are made legal by signing a civil partnership document and are ended by being dissolved in law.
However, the two are very similar when it comes to their legal and financial implications. People in a civil partnership enjoy the same inheritance and tax status as those who are married. This is a key distinction from the rights of people who choose to live together (cohabit) without formal agreement.
Cohabiting is when two or more people, usually a couple, live together sharing their home and other aspects of their lives such as finances. It has no status in law unless you draw up a cohabitation agreement with the help of a family lawyer.
A cohabitation agreement protects everyone. If a couple lives together without the safeguards of a legal agreement (marriage, civil partnership or cohabitation agreement), it can cause extra problems if they split up such as determining who has the right to stay in the property.
One partner could be left financially disadvantaged or even homeless, for example. And if one partner were to die, the survivor could lose their much-loved home and possessions if they didn’t have formal rights.
People choose civil partnerships for different reasons. They might not like the formality of a marriage or consider it a religious ceremony, but still want to commit to each other or protect their rights as a couple.
Having a legal agreement that protects both parties’ rights can be useful and reassuring. It can also protect any children, stepchildren and dependents.
A civil partnership is registered between two people in front of two witnesses and a registrar. There’s no requirement to have a ceremony, although it is an option to have one if it’s wanted.
Legally, this gives both partners similar rights to being married with civil partners’ income and assets assessed jointly for tax credits and/or benefits. If a couple wishes to separate later on, the partnership can be legally dissolved.
Having a civil partnership can give the emotional reassurance that if one partner passes away, the other is protected.
However, it is important for both partners to make a Will, as this gives further financial and legal protection and makes inheriting the other’s estate simpler and, sometimes, more tax efficient.
Couples setting up home together have a number of options to protect themselves financially and legally. It can be even more important when people are older, when assets such as a home and money are more likely to be a consideration – and there could be children, loved ones and stepfamilies to think about.
● A prenuptial agreement can be used if one partner has significantly larger assets or property holdings than the other when the couple enter a marriage or civil partnership. It is not legally binding, but a court could take it into account following a break-up.
● A post-nuptial agreement is similar but is drawn up after getting married or entering a civil partnership.
Many couples also set up a Power of Attorney to get someone they trust to manage their financial affairs and make health and welfare decisions, should they be unable to do this for themselves in the future.
The laws concerning living together as a couple changed recently to become more inclusive and protect all types of partnership. A family lawyer can offer can provide information, advice and guidance on the different options.
Later life and retirement can be one of the most enjoyable periods of our lives; we’re older and wiser, more aware of who we are, but most importantly we’ve now got the time to go out and do whatever it is we’ve always wanted to do.
Over the coming months we plan to bring you a series of podcasts covering the topics that matter in what we hope is an engaging and useful way.
New relationships can be joyful and life-affirming, but whether you plan to get married, have a civil partnership or simply cohabit protecting your future isn’t unromantic – it’s essential.