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Inheritance and same sex partners: to what extent does the law protect those who decide against Civil Partnership?
Prior to the Civil Partnership Act 2004 the law created a wholly unfair inequality in inheritance laws between different and same sex couples. The only way to ensure that your partner would receive anything from your estate was to make a Will specifically including them. No matter how committed, long standing and ‘marriage-like’ your relationship, failure to do so would mean that they would receive absolutely nothing. Now, with the passing of the 2004 Act, Civil Partnerships can be entered into which have the same standing as marriage in the eyes of the law. Civil partners are protected where there is no Will because they benefit under the ‘intestacy rules’ which apply in these situations. But where does the law leave couples who chose not to enter into a civil partnership?
Estimates of the homosexual population in the UK have varied considerably over the past number of years. A treasury assessment before the enactment of the Civil Partnership Act placed the percentage at about 6%, while the Office of National Statistics (ONS) estimated at the end of 2010 that this figure was closer to 1.5%. With an estimated total UK population of sixty million this puts the figure somewhere between 726,000 and 1.5 million. Add to this the ONS’ latest statistics, published at the end of 2010, of the total number of civil partnerships formed since the Act came into force of 46,622 and it is clear that many same sex couples are choosing not to formalise their relationships.
It is always preferential for a Will to be made, whatever your personal circumstances. It is the only opportunity available to you to make your wishes clear. This applies equally to same and different sex partners. Making a Will also offers an opportunity to consider your inheritance tax (IHT) position. Civil partners have the benefit of inheritance tax laws which make transfers between them on death exempt from IHT. However, for those who are not in a civil partnership, there are ways in which a Will can be structured so that the maximum use of available exemptions and allowances can be used. In many cases this can be so effective as to completely extinguish any liability to tax.
Sadly, many will find this out all too late, often upon the death of a partner who has not made a Will and amid the realisation that they will receive nothing. In this situation it is still possible for a claim to be made on the estate for provision. The Inheritance (Provision for Family and Dependants) Act 1975 allows certain classes of people to claim against an estate where reasonable provision ought to have been made for them. Prior to the Civil Partnership Act the relevant classes were (a) married spouses, (b)former spouses and (ba) those who during the period of two years prior to the date of death were living ‘as husband and wife’.
Initially the law did not recognise same sex couples in any category. Despite the apparent gender specific terminology, over time and following a number of significant cases in this area same sex relationships were recognised under the last of these headings. Now the Civil Partnership Act has specifically amended the law so that the survivor of a same sex relationship can bring a claim, either as a civil partner under section (a) and (b) or, where no civil partnership has taken place, under section (ba).
In order for a relationship to qualify under section (ba) many factors will be considered. In particular, the period lived together in the same household, the intimacy and commitment of the relationship and how it was presented to/viewed by the outside world. The court will look to award reasonable financial provision for the survivor to maintain themselves in a manner suitable to the circumstances. Critically, for the disappointed civil partner or former civil partner the provision is more generous in comparison and does not rely on a requirement for maintenance.
For those couples who do not wish to formalise their relationship by a civil partnership the Inheritance (Provision for Family and Dependants) Act offers some relief should the survivor find themselves with nothing under the intestacy provisions. However, claiming against an estate is not an easy process. There is a time limit within which claims can be made and proper advice must be sought and what constitutes reasonable provision will be decided by the court or settled by negotiation between the parties. It is therefore by no means a substitute for making provision in a Will but it can be a welcome lifeline.
Civil partners, much the same as married couples, are clearly in a privileged position as far as the law is concerned, as compared with co-habiting couples. Civil partnership, like marriage, is not for everyone and it could be argued that the law does not go far enough in protecting the many committed and long standing relationships not legally formalised. However, as things stand couples in this position have no choice but to take the initiative themselves to protect their partner by making sure they each have a Will in place, or face the prospect of a legal challenge upon first death.
If you require any advice in circumstances such as these, then our specialist team of contested probate and trust lawyers, headed up by Association of Contentious Trust and Probate Specialists (ACTAPS) Associate Member Amanda Smallcombe, will be able to assist. Call now on 01206 217395 to speak to Amanda or one of her team.