June 7, 2022

Zurich - Co-habiting Couples

Catriona Bolger QFA
Senior Pensions & Investments Advisor
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Civil Partnership & Certain Rights and Obligations of Cohabitants Act 2010

The definition of a Co-habitant as “one of two adults, who can either be of the same or opposite sex, who live together as a couple in an intimate and committed relationship and who are not related to each other”.

Definition of Qualified Co-habitant as an “adult who is in a relationship of cohabitation of 2 years or more if dependant children are involved or for 5 years or more in other instances”. The couple are not married to each other. Although not automatically entitled, a Qualified Co-habitant now legally entitled to claim from the deceased cohabitant’s estate within 6 month’s of the Grant of Representation.

Common Law Status

'Common Law' status is often referred to when talking about couples who have lived together for a period of time but have not got married. Some countries recognise this status and allow the same benefits as married couples to be enjoyed by ‘common law husbands/wives’.

Example, in Ontario Canada if you and your partner are living common law, then you will be considered a spouse for spousal support purposes if you and your partner have cohabited for three years or if you and your partner live in a relationship of permanence and have a child together.

Common Law does not have any relevance in Ireland.

Civil Partnership & Certain Rights and Obligations of Cohabitants Act 2010 gave some rights but not that taxation privileges.

Capital Acquisitions Tax & Co-habiting Couples

Co-habiting couples are still treated as ‘strangers’ for the purpose of Capital Acquisitions Tax.

All assets inherited/gifted between the two may give rise to a tax liability at 33%. The current Group C Threshold is €16,250.

Co-habitants will have a tax liability.

- If no other gifts/inheritances received under Group Threshold C of €16,250 on excess over €16,250

- Or if full €16,250 “used up”, tax will be on full amount!

Policies of Life Insurance

Co-habiting couples effecting policies of life insurance may find themselves with a C.A.T. liability of which they are unaware.

If one dies, the sum insured is passed to the surviving policy owner. If survivor is deemed not to have paid premiums, problems may arise.

- The payor of the premiums dictates the potential inheritance tax

A Mortgage Protection Policy

Section 10 of the Capital Acquisitions Tax Consolidation Act 2003 (CATCA2003) the ‘benefit on death’ becomes chargeable to CAT the following criteria must exist:

1.      There must be a beneficial entitlement  

2.      It must be in possession

If the policy is assigned to a lending institution, the policy is not owned by the co-habiting couple. The sum insured is payable in the event of a claim to the lender.

Neither partner benefits from policy.

Dwelling House Exemption - Inheritance of half the house

Couples own houses as ‘Joint Tenants’. On the death of one partner, the property passes to the other and may be tax free under ‘Dwelling house Exemption’ if:

- A period of 3 years has passed prior to date of inheritance

- That there is no interest in another property

- That they continue to live in property for further 6 years

Co-habiting couples may face an inheritance tax liability if the house is not owned for 3 years.

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