Marriage and Inheritance Tax

Figures from the Office of National Statistics have confirmed that fewer couples are now getting married. There are many reasons for this but, from a tax perspective, it can be an expensive problem.

There is no legal “common law marriage” as some couples assume and, as an unmarried couple there is currently no legal protection, however long they have been together.

Intestate
In particular, if one partner dies intestate (without a valid will) then their estate would pass to their family, e.g. siblings, parents, children or more remote family and not necessarily, as they may wish, to their surviving partner.

This could, ultimately, leave the partner without income, a home or other assets. Which makes writing a Will, to protect the surviving partner, very important.

However, even if the estate is left to the surviving partner under a Will, it will not be covered by the spouse exemption and so, if the value is over the Nil Rate Band of £325,000 and any residence Nil Rate Band (RNRB) available, then Inheritance Tax (IHT) may be due.

If most of the value is in the home then it could, again, put the home of the surviving partner at risk, even though it may be possible to pay the IHT in instalments.

Protecting the surviving partner
Therefore, it is important to give serious consideration to the status of a relationship and, if marriage is not on the cards, then to plan to save IHT and protect the surviving partner is very important.

Bishop Fleming can advise on IHT planning specific to each individual’s circumstances and is also registered to deal with Probate matters.