When comedian Ricky Gervais recently joked that he and his long-time partner, Jane Fallon, might finally tie the knot simply to avoid heavy inheritance tax bills, it made headlines.
After more than 40 years together, the thought of Britain’s most famous comedy provocateur heading down the aisle prompted laughs and gasps in equal measure.
“Beneath the punchlines lies a very serious legal and financial reality that affects hundreds of thousands of unmarried couples across Surrey and the wider UK,” said Georgia White, family law solicitor at KWW in East Molesey. “For many cohabiting couples, marriage is viewed merely as a piece of paper or an outdated tradition. However, as Gervais highlighted, the law treats married couples and unmarried partners entirely differently, particularly when it comes to tax, property, and inheritance.”
The ‘Common Law Marriage’ myth
One of the most persistent and dangerous misconceptions in English law is the idea of ‘common-law marriage’.
“Many people believe that living together for a certain number of years grants them the same automatic legal rights and protections as a married couple or civil partners, but it does not,” said Georgia. “While spouses and civil partners can transfer assets between each other completely free of Inheritance Tax (IHT), cohabiting couples do not benefit from this spousal exemption. A surviving unmarried partner could face a 40% IHT bill on any inheritance above the nil-rate band, mirroring the exact scenario that caught Ricky Gervais’ attention.”
The Government consultation
The vulnerability of cohabiting families has not gone unnoticed. There is currently an ongoing government consultation examining the rights and legal protections of cohabiting couples, focusing on issues such as property rights, financial provision upon separation, and succession rights after bereavement.
“While reform may eventually bridge some of the differences in the current legal framework, legislative change takes time,” said Georgia. “Relying on future law changes is a risky gamble for your family’s financial security today.”
How to protect your interests
Fortunately, you do not need to rush out and book a wedding venue just to protect your partner or your assets. There are robust legal mechanisms available right now that can safeguard your interests while cohabiting:
Draft a cohabitation agreement: A cohabitation agreement explicitly sets out who owns what, how household expenses, mortgages, or rent are shared, and how assets – including property and belongings – will be divided if the relationship ever breaks down. Having this clarity provides enormous peace of mind from day one.
Make and update your Will: A legally valid will is one of the most important documents an unmarried person can possess. By drafting a clear will, you can explicitly leave your property, savings, and personal possessions to your partner, ensuring they are provided for in the event of your death.
Protect your home ownership: How your property is registered matters. Unmarried couples can own property either as joint tenants (where the surviving owner automatically inherits the whole property) or as tenants in common (where each owns a distinct share that can be left to someone else in a Will). Legal advice is vital to ensure how a property is owned aligns with your wishes, and KWW’s Wills specialists can guide you there.
Review pension and life insurance beneficiaries: Pension schemes and life insurance policies do not always automatically fall under your Will. You must formally notify your pension trustees and insurance providers of your wishes to ensure your partner is nominated as the beneficiary of death-in-service benefits or private pensions. You should also be aware that the rules around pensions and inheritance rules are changing next spring, when pensions will be considered part of your estate when it comes to valuation time.
Secure expert guidance today
While Ricky Gervais might use the threat of inheritance tax as comedic fodder, the practical implications of failing to plan for your future together are no laughing matter.
Whether you want to draft a comprehensive cohabitation agreement, update your Will, or navigate complex estate planning, taking proactive steps today can prevent immense distress tomorrow.
If you and your partner live together and want to ensure your assets and loved ones are fully protected, get in touch with Georgia White and/or our expert private client team today to discuss how we can help secure your peace of mind.
IMPORTANT: This blog is for information only and should not be taken as formal legal or financial advice. KWW Solicitors is regulated by the Solicitors Regulation Authority.