This month will host one of the most anticipated weddings this year, the wedding of HRH Prince Harry to Meghan Markle. Amongst the excitement of planning for the big day, thinking about what might happen in the future is unlikely to be at the forefront of the happy couple’s minds. However this is an important milestone in a relationship, and it is therefore a good time to think about how you might plan for the future should you be faced with the loss of your spouse or civil partner.
What are the Inheritance Tax benefits of marriage?
You may have read my colleague’s recent article about two Irish friends who decided to marry for the sole purpose of avoiding Inheritance Tax. Whilst there are significant Inheritance Tax benefits available to married couples or those in a Civil Partnership, this is not the only area of succession where married couples or Civil Partners are treated differently.
When married couples or Civil Partners leave assets to each other after death, there is no Inheritance Tax to pay. This applies even when an estate is over the Inheritance Tax nil rate band, currently £325,000.
If a couple live together, but are not married, or in a civil partnership, then they could face an Inheritance Tax bill when leaving assets to each other, if the estate is worth over £325,000.
Are there any other benefits for married couples or Civil Partners in succession law?
Married couples and Civil Partners are also treated differently when someone dies without a Will.
If a married person or Civil Partner dies without leaving a Will, their spouse or Civil Partner has an entitlement to what is known as Prior Rights. These are rights set out in law that allow the survivor to receive the house and household contents up to a set amount, and a cash sum from the estate. In many cases, these Prior Rights will result in the survivor inheriting the whole estate. Couples who live together have no automatic right to inherit if their partner dies without a Will. Instead, the survivor has to apply to court, within six months of the death, for a share of the estate. There are no automatic rights and no guarantee that the court will award anything to the partner left behind.
Whilst the financial benefits on death are not the most conventional or traditional reason to accept a marriage proposal, marriage does bring benefits in terms of succession.
If you wish to discuss the rights of spouses, Civil Partners or cohabitees further, in relation to succession, our Private Client team will be able to assist.
Rachel High is a Senior Solicitor in our Private Client Department. Should you require any further information on Wills or succession planning, please contact Rachel on 01382 309230 or at rhigh@thorntons-law.co.uk or contact any member of the Private Client team.