With the increasing value of houses and estates it is not surprising that inheritance tax is a big issue. Married couples have exemptions available under inheritance tax rules, for example a spouse can be left an entire estate without facing a large tax bill.
In cases where a spouse dies without making a will leaving children, the first £125,000 is inherited by the surviving spouse, with half of the remainder then given to the deceased’s children.
A trust is created for the balance of the remainder from which the income earned is paid to the surviving spouse for as long as he or she lives; only following the death of the surviving spouse these funds held on trust are paid to the deceased’s children. This ensures that a surviving spouse is well provided for.
However, this is not the case for unmarried couples. If a partner in an unmarried couple dies without making a will, the remaining partner does not automatically receive any money. Instead the estate passes to children, if they have any, or to their family.
Unmarried partners can, however, make a claim for a share of the estate under the Inheritance (Provision for Family and Dependants) Act
1975. This involves needing to prove that the surviving partner was either dependent on the deceased or had lived with the deceased for a certain number of years. Of course, this is an inconvenience at what is a difficult time.
Also, even if a Will is made by a partner in an unmarried couple, if an estate exceeds the inheritance tax threshold, currently £300,000, the surviving partner can then be faced with a large tax bill.
Always ensure you obtain legal advice before entering into any form of binding agreement.
Therefore, it is important for all couples, married and unmarried, to ensure that adequate financial provision is made should the unthinkable happen.
Also, unmarried couples should look into granting Powers of Attorney to each other. For example, should a partner be incapacitated through illness or an accident, their partner has no rights regarding their
property or being able to make medical decisions on their behalf. An unmarried couple finding themselves in such a position will usually have to rely on the incapacitated partner’s family to do the right thing and allow the other partner to make decisions.
Obtaining a Power of Attorney is usually just a simple case of filling out a form after obtaining legal advice. The form is signed and witnessed and then kept in a safe place, usually the offices of your solicitor, until it is needed.
When needed, the Power of Attorney is then registered at the Court of Protection, which contacts relatives to ensure there are no objections.
Planning ahead by making a Will and considering a Power of Attorney if you are unmarried can save a lot of trouble, heartache and problems for your partner in the future. Always ensure you obtain legal advice before entering into any form of binding agreement.
