Unmarried Couples

With the changes to Inheritance Tax leading most married couples to debate changing the provisions in their Wills (whether it be recommended or not) it is worth remembering the provisions relating to unmarried couples are completely different and that the new ‘sharing’ of nil rate bands DOES NOT apply.

It is essential that couples living together consider the financial implications of their circumstances. Partners need to consider carefully what arrangements they want to make regarding their home, its contents, the mortgage or rent and life assurance.

Partners should make such written arrangements and agreements as are necessary to define the position as clearly and accurately as possible. As part of this documentation it is essential that couples living together have Wills.

Areas for particular attention include:

1. A husband or wife who dies without a Will are intestate and the estate will be divided by the rules of intestacy. However, the survivor of an unmarried couple does not come within the intestacy rules and may be entirely dependant on the discretion of the Court for their protection.

2. Gifts between husband and wife during lifetime or on death are exempt without limit. The same exemption does not apply to unmarried couples. This can result in a significant inheritance tax liability on the separate deaths of the couple, and a sizeable reduction on the estate passing to surviving children.

3. The legal ownership of the home requires serious consideration so that an appropriate arrangement is made for the survivor’s continued occupation of the original property or alternative accommodation if the former is sold.

4. They must also consider guardianship for any children.

5. The remainder of the estate will also pass under the rules of intestacy meaning the survivor of the couple will inherit none of the personal chattels of the deceased.

6. Any court action taken by a survivor could be time consuming and stressful and there is no guarantee that the action will succeed.

“More and more people are living together either as man and wife (but not legally married) or as civil partners,” says Alan Porter of The Will Centre. “This can create real problems if a Will is not made to reflect their circumstances. We have seen instances at The Will Centre where real financial hardship has resulted because a Will has not been done. It’s such a shame when this happens as making a Will is not a difficult task.”

For further advice contact The Will Centre on 01752-607040 for details of how to avoid this avoidable situation.