Legal Protection for Cohabiting Couples

Legal Protection for Cohabiting Couples

26. September 2022

I. Overview

In comparison with a married couple, cohabiting couples have the issue that they are legally treated as individuals. In addition, a cohabiting couple does not have the option of using matrimonial property law to favor a partner in the event of death, since there is no applicable property law for cohabitation. Accordingly, it is all the more important for cohabiting couples to provide for each other in other ways and also, to regulate the consequences in the event of a separation.

II. Children in Cohabitation

The father of the joint child must declare that he is the child’s father by means of a recognition procedure. In addition, a joint declaration may be made that parental care will be exercised by both parents.

If the child is not a joint child, the partner has the option of adopting the child if necessary.

III. Death of the Cohabiting Partner

The cohabiting partner is not a legal heir under Art. 457 ff. CC. Without a corresponding provision in favor of the cohabiting partner, the latter would consequently receive nothing in the event of death. Accordingly, it is recommended that cohabiting couples make provisions for each other’s benefit by means of a will or an inheritance contract. Any compulsory portions must be taken into account, especially those of children.

It should also be noted that in many cantons the inheritance tax for cohabiting couples is disadvantageous compared to married couples. With sound legal planning, disadvantages in this respect can – at least partially – be eliminated. For example, the cantons of Schwyz and Obwalden do not have any inheritance tax.

As far as social security is concerned, the surviving cohabiting partner is not sufficiently protected in case of death. The surviving cohabiting partner does not receive any benefits from the first pillar (AHV). In terms of the second pillar (pension fund), it must be examined whether the surviving cohabiting partner can be a beneficiary. Whether and to what extent such a benefit is possible depends on the respective regulations of the pension fund. Also with regard to Pillar 3a benefits, it must be specifically examined in each case whether the requirements for a beneficiary are concurrently fulfilled.

As an alternative or as a supplement to the beneficiary under inheritance law, the cohabiting partner can benefit from a death insurance policy. The benefit of such a death insurance can be paid out directly and immediately and is not part of the inheritance. Pure death insurance policies do not have a surrender value and are therefore not taken into account for any compulsory portions. The cohabiting partner can claim the agreed death benefit directly from the insurance company.

IV. Advance Care Directive

In addition to the regulations under inheritance law, it is recommended that cohabiting couples appoint each other within the framework of an advance care directive. In the event of incapacity, this allows the partner to take care of the most important matters (personal care, financial care, legal representation). If no arrangements have been made, the child and adult protection authority decides on the appointment of an appropriate advisor.

V. Pension Gap in the Event of a Reduction in Workload

If a person in a cohabiting couple reduces his or her own workload, for example, in order to take over childcare and run the household, a pension gap quickly arises for this person in the pension fund. In contrast to a divorce, there is no legal entitlement in the event of separation in the case of cohabitation for this gap to be filled by the partner who has not suffered any financial loss. Accordingly, it should be ensured that there is financial compensation for such a reduction in workload.

If one partner gives up working completely, it must also be ensured that the minimum, annual AHV contribution is paid.

In practice, unfortunately, it still often happens that nothing is regulated in this regard. As a result, a mother who has reduced her workload in favor of the family is threatened with the poverty trap after separation as well as old-age poverty upon retirement, since she has only made small payments into the 1st and 2nd pillars.

VI. Separation

In the event of separation, there is no mutual legal entitlement to financial compensation for a cohabiting couple. The cohabiting partner is not entitled to any part of the other’s property, nor is he or she entitled to maintenance payments. This applies even if one person has reduced or completely given up gainful employment during cohabitation (e.g. in the context of childcare and/or running the household). A corresponding provision in a cohabitation agreement can protect the lower-income partner and avoid conflicts.

VII. Cohabitation Agreement

A written cohabitation agreement can eliminate some of the disadvantages of cohabitation outlined above.¨

The following points can be agreed upon in a cohabitation agreement:

– Inventory list (what belongs to whom);
– Workload and income conditions;
– Acquisition of real estate, if any;
– Sharing of common household expenses;
– Childcare and management of the household;
– Possible financial compensation in the event of a reduction in workload (pillars 1 and 2);
– Child support (approval by KESB);
– Power of attorney and release from medical confidentiality (can also be regulated separately);
– Dissolution of cohabitation and consequences of separation;
– Alimony in the event of separation;
– Life insurance in favor of the partner.

VIII. Conclusion

Cohabiting couples do enjoy some advantages, as they are better off than married couples in certain respects (AHV pension, separate tax returns, quicker separation). At the same time, however, there is no legal protection for this form of living together. In order to minimize the negative effects, the conclusion of a cohabitation agreement is recommended, as well as an inheritance and, if necessary, insurance law regulation for mutual protection in the event of death.

-MLaw Armin Gilg, Attorney at Law and Notary, Partner