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How unmarried couples can protect their finances

How unmarried couples can protect their finances post image

A reader asks what unmarried couples should do to protect themselves when they’ve accumulated significant assets:

What if you’re not married but [are] in a relationship? As far as I can see there are tax issues if you die but want to leave your money to your other half. Is there anything that can be done other than get married?

Yes! There are several steps cohabiting partners should take that don’t involve a walk down the aisle.

Law in the United Kingdom is as prejudiced against ‘living in sin’ as a firebrand preacher.

Moreover, you don’t earn ‘common-law marriage’ loyalty points for years of service.

I don’t

There are two major problems that place the unmarried at a serious disadvantage:

Intestacy – Cohabitees have no right to inherit if their partner dies without leaving a will. That can get very messy.

Inheritance tax – Married couples can inherit everything from each other tax-free. Cohabitees have no more protection – actually less protection – than the cat’s home.

The unmarried are treated as second-class citizens in many other situations, too. Here’s what I’ll cover below:

  • Inheritance Tax
  • Property
  • Wills
  • Bank accounts
  • Debt
  • Pensions
  • Power of Attorney
  • Where’s the paperwork?
  • The compromise solution

I thought I knew this area inside out, because The Accumulators were not actually Mr & Mrs in the eyes of the law.

But further research has uncovered a surprising number of traps for the unwary.

That’s made this post ridiculously long, so please do skip to the most relevant sections for you and yours.

Monevator Minefield Warning – This article is about how to protect your finances if you’re unmarried and you stay together. Splitting up is another kettle of asset division. Luckily, there are plenty of lawyers who will help you with that.

Also while we’re preambling: the constituent countries of the UK have different legal systems. I live in England so my research is based on the English legal system. Wherever you are, please do your own research. I have personal experience of these issues, but I am not a trained lawyer.

Inheritance tax

Assuming you have a will, inheritance tax can be the next big problem for the unmarried.

Inheritance tax is not due on any assets you leave to your spouse or civil partner.

Not so if you’re unmarried.

Inheritance tax is typically due on the value of your estate above £325,000 left to anyone else – including your unmarried partner.

Your estate amounts to the value of your:

  • Property
  • Other assets (including crypto and life insurance policies not written into well-designed trusts)
  • Money
  • Possessions
  • Minus debts and funeral expenses

What’s a possession? Will HMRC come round to value your toaster? (I wrote this as a joke but then discovered I wasn’t far off.)

You can see if the value of your estate breaches the inheritance tax threshold with the help of a handy calculator from Which.

And don’t forget your toaster.

Settling inheritance tax

Inheritance tax is paid from your estate before anyone else gets anything.

Your unmarried partner is in the tax firing line unless you can redesignate them as a charity, political party, or community amateur sports club.

(I assumed that’s doable but Mrs Accumulator A.F.C. was having none of it.)

The nightmare scenario is your estate doesn’t cover the bill, and your partner is forced to sell the house.

For many unmarried couples, their property is their biggest source of inheritance tax liability.

My plan was always to keep an eye on property prices, split the value of the house between us, and calculate our respective estates annually.

Keep up-to-date because you can be caught out surprisingly quickly in a rising stock and property market, especially if you factor in a high FIRE savings rate, too.

Alas there’s no simple way around inheritance tax for the unmarried, though the trust options I’ll get to in a minute may soften the blow.

In the immortal words of Beyoncé’s accountant, if you don’t want to pay inheritance tax then: “you shoulda put a ring on it.”

(Beyoncé’s accountant wasn’t as helpful as I hoped.)

Note: Inheritance Tax exemptions are available to business owners as well as those on active service in the armed forces, police, fireservice, and as paramedics. Too right.

Life polices written in trust

Various life assurance / life insurance options can help square circles such as:

  • Ensuring an inheritance for your children from a previous relationship.
  • Enabling your current partner to carry on living in the family home after your untimely demise.

Monevator contributor Mark Meldon wrote about using a life assurance policy wrapped in a trust to manage this situation for unmarried couples.

Life policies written in trust are another way to pay an inheritance tax bill you know is inevitable. Inheritance tax must be paid swiftly – within six months of your death. A life policy ensures funds are on hand, while the trust element stops the payout adding to your estate.

There are other niche trust options but mileage varies.

Property

How you own your home matters.

Tenants in common (Joint owners in Scotland)

Here you each own a defined share of the property. If you die, your share falls into your estate and is inherited by the beneficiary named in your will.

Don’t have a will? Then your unmarried partner has no right to your percentage of the property. None whatsoever. See the wills section. It’s outrageous.

That problem is solved if you make a will (and leave your property to your partner).

Ownership doesn’t have to be split 50-50 between tenants in common. That helps you manage uneven financial contributions.

It can also put your inheritance tax liability in the bucket less likely to be kicked. Say when one of you is much younger than the other.

For example, only 20% of the value of the house is added to your estate if that’s your share on death.

Obviously HMRC’s sniffer dogs perk up should you downgrade your share and pop your clogs shortly thereafter.

Tenants in common is the cleaner option if you break up or want to leave a slice of your property to your children.

Your care home fees are also means-tested against your share of the property, rather than its whole value as with joint tenants.

Joint tenants (Joint owners with a survivorship clause in Scotland)

You own the property together. Your share is intermingled like milky coffee and there’s no dotted line that divides it between you.

If you die, your co-owning partner takes the whole property. They’re not relying on you remembering them in a will.

You can’t – for example – have a drunken row, rewrite your will that night, name the local drugs baron as heir apparent to the house, have a fatal heart attack the next day, and exact the perfect revenge upon your partner.

No.

The right of survivorship gives your partner the last laugh because it trumps any property vengeance laced into your will.

Not a cunning plan…

Now I know what you’re thinking:

‘Aha! That gets us out of inheritance tax because I don’t have a property share to fall into my estate…’

HMRC has thought of that. Inheritance tax still applies in the case of unmarried couples who are joint tenants. You’re assumed to own the house 50-50.

I know what you’re thinking, part II:

‘Aha! Let’s rack up credit card debt and order an all-the-trimmings Dignitas blow-out because my unpaid creditors can’t claim against property that doesn’t pass to my estate…’

They’ve spoiled that sport, too. Your creditors can apply for an ‘Insolvency Administration Order’ within five years of you dropping off the log.

It’s messy, because it involves the courts, but creditors can force survivors to pay an amount up to the value of the deceased’s share of the property.

And one law firm thinks the courts are liable to rule in favour of the creditors:

Unless the circumstances are exceptional, the court must assume that the interests of the deceased’s creditors outweigh all other considerations.

Let’s not sully your memory with this nightmare.

What type of ownership do I have?

Your title deeds should reveal all, or you can find out via the Land Registry.

You can switch from joint tenants to tenants in common via a notice of severance.

Note, your inheritance tax property allowance is reduced by £1 for every £2 it’s worth over £2 million. Which is a nice problem to have.

Equity release and other schemes

Equity release can force the value of your estate below the inheritance tax threshold.

  • A lifetime mortgage incurs debt that will be subtracted from your estate.
  • A home reversion scheme reduces the value of your property because you sell a percentage of it to a finance company.

I wouldn’t choose either approach though purely to manage inheritance tax. I mention these schemes only as avenues for research – especially if you like dancing with the devil.

Another rabbit hole to explore is boosting your residence nil-rate band. You can do this by leaving your main property to a child or grandchild, including step and adopted children.

That can raise your inheritance tax threshold from £325,000 to £500,000.

This could work out if you’re confident that your partner and children get on very well.

It’s not clear to me if this option can be combined with a trust guaranteeing the right of your partner to stay in the house. (Jane Austen wrote the book on this.)

Wills

Here’s why unmarried life partners need a will – if you die without one then the bloody Queen inherits your estate before your partner:

A list of family members who can inherit your estate before your unmarried partner.

This screenshot from the government’s intestacy tool shows that your partner is not even in the queue.

True, the list outlined in green reveals a long order of succession before your estate actually falls into the hands of the Queen.

But I don’t even know if I have any half-uncles, never mind whether they’ve got gambling debts they’d love to pay off by pawning Accumulator Towers.

Who knows who’ll come crawling out the woodwork?

I got a will purely to prevent my mum throwing Mrs Accumulator out onto the streets if I bought the farm. (Hi mum! I only put this in to test if you’ve read this far!)

Make a will, even if you’re in your twenties. Certainly the moment you buy a property together. Or have kids. Life only gets busier and more complicated.

You can easily get a mirror will for a good price from an online willmaker.

Bank accounts

Your unmarried partner can access any money in joint accounts without interruption should you snuff it first.

Balances in individual accounts will be frozen until your estate is settled – which can take an ungodly length of time.

Even if you run your finances separately, it makes sense to hold some money in joint accounts, especially if your partner relies on you to pay the lion’s share of the bills.

Obviously you wouldn’t provide them with a list of individual account password details. That would be wrong. That’d breach your bank’s terms and conditions. Very bad.

Joint accounts and inheritance tax

Odd though it sounds, most joint bank accounts are held as joint tenants. As opposed to tenants in common.

In other words, you co-own the funds. That’s why banks won’t block your partner’s access after you enter Valhalla.

But joint tenant ownership doesn’t protect you from inheritance tax.

HMRC will consider your estate to owe inheritance tax in proportion to your contribution to the joint account’s funds – according to various law firms.

If you deposit all the monies then the account falls 100% into your estate.

Moreover, if one partner withdraws more than they contributed, this can be deemed a gift. Inheritance tax is due if you die within seven years of making the gift and its value exceeds your annual gift allowance.

HMRC don’t bother with this if you’re married. Nnngh! The social pressure.

Debt

Debt is paid from your estate after death – assuming it’s not joint debt, and your partner didn’t sign up to a loan guarantee.

Obviously debt deducted from your estate will affect your partner’s financial standing if they’re due to inherit what’s left.

In the worst case, they can be forced to sell a shared asset such as the home to cover your outstanding debt. Marital status is irrelevant here.

Pensions

Pensions do not typically form part of your estate. This makes them an ideal asset storage facility for unmarried couples down on inheritance tax.

ISAs, however, do count towards your estate.

Monevator Minefield Warning – True tax efficiency balances your mix of ISAs and pensions against your income tax, annual allowance and lifetime allowance limits as well as inheritance tax. It’s a tricky trade-off.

Bizarrely, pensions do fall foul of inheritance tax when your beneficiary is legally entitled to benefit from them upon your death.

Yet you’re off the inheritance tax hook when the scheme’s administrator retains the discretion to pay whoever they want.

You may have noticed this discretionary catch on your pension’s ‘Expression of Wishes’ form – where you indicate who’s in line for your retirement jackpot.

The small print goes something like: “Thanks for this, we’ll consider it.” Words to that effect, anyway.

I used to think this was symptomatic of a bad attitude. If I put Mrs Accumulator on the form then I want Mrs Accumulator to get the dosh when I cop it, right?

Who else have they got in mind, eh? Mrs H Lansdown? Mr AJ Bell?

But it turns out the scheme was doing me a favour. Expression of Wishes wording is designed to enable your pension’s death benefits to sidestep your estate.

Not every pension scheme is set up as a discretionary trust – the type that helps you avoid inheritance tax unpleasantries.

Sizing up your pension’s small print

If you haven’t ever looked into this, then I suggest you:

  • Check your scheme allows an unmarried partner to scoop the death benefits from your pension when you expire.
  • Ensure the benefit is paid at the discretion of the pension’s trustees.
  • Double-check lump sum payments are discretionary.
  • Fill out an Expression of Wishes form for each pension. This is right up there with, ‘Get a will, for God’s sake.’

The scheme’s administrators do not have to follow your wishes. That’s key.

But the lack of social media outrage at pensioners living in cardboard boxes – while Mrs Lansdown eats cake –  makes me think the system probably works.

Note, the terminology isn’t consistent but can matter. Some providers may call their Expression of Wishes form a Nomination of Beneficiaries.

But I’ve discovered that nominating a beneficiary triggers the Inheritance Tax mousetrap for the Nest Pension. (Nest also offers an Expression of Wishes option that avoids inheritance tax.)

My own SIPPs give me a straightforward anti-inheritance tax route. But UK pensions are a patchwork quilt, so check your schemes’ details carefully.

If you have an annuity with death benefits then make sure it includes a similar discretionary feature. As long as the amount you hope to pass on is paid at the discretion of the annuity’s trustees then all should be well. Do your own research for more clarity.

Incidentally, ‘death benefits’ is the term used in the pension / insurance ‘biz’ for any largesse that might take the edge off your sad loss for those you leave behind.

A grey area

The other pension snag is that contributions made while you’re in ill-health, or within two years of death, may be caught up in the inheritance tax net.

The situation is as clear as North Sea fog, but it seems that if you live for two years after making a contribution, HMRC will likely deem it onside.

However it’s dead against people shovelling money into their pension, then promptly carking it in a puff of inheritance tax avoidance.

The taxman deals with this murk on a case-by-case basis.

So look after yourself and hang about to enjoy your own pension.

If you’d like to know more, then please hold while I transfer you to the relevant department.

And another thing…

Make sure your partner is the named recipient of any death-in-service benefits you’re entitled to via your work pension.

Also, unmarried couples can’t inherit any State Pension. Whereas married / civil partnered couples can, in particular circumstances.

Finally, some schemes definitively pay worse death benefits to unmarried partners. Mrs Accumulator’s defined benefit pension is like this.

It’s just another factor to take into account when you ponder the big picture. (Am I starting to sound like your parents?)

Power of attorney

Everyone should delegate power of attorney to a trusted loved one and, as ever, that goes double for unmarried partners.

These powers enable your partner to make health and financial decisions in your best interests should you lose the mental capacity.

  • If you’re young, think about what could happen if you suffer a severe brain injury in an accident.
  • If you’re older, think about strokes, dementia, and that should do it.

You can’t rely on institutions consistently consulting your unmarried partner instead of some nearest family member who pops up like a pantomime villain.

SCENE
The Accumulator is in a coma, hooked up to a life support machine.

Doctor: Shall I just turn him off then?

Mrs Accumulator: NOooo! There’s a chance my beloved might still make it back to me!

Evil half-uncle Nigel: Yep, flip the switch Doc. I want his Nintendo collection.

Doctor: Okay, then. [Flick. Beeeeeeeep.]

Don’t find that very convincing? You don’t know my half-uncle Nigel.

The point is: consider how much institutional friction an unmarried partner will face getting anything done the minute you fade from the scene.

Which is also why you should…

Sort out your paperwork

Make sure they know where to find everything when you’re gone. Even when they’re blinded by tears. (Hopefully.)

If you’ve read this far, it’s probable you’re the one who thinks about this stuff while your other half happily outsources the worry to you.

But there’s no point diligently ticking off these measures to protect them, if they don’t know you’ve done it; or don’t remember, or can’t access the necessary proof.

So come up with a system. How about a heartfelt letter kept somewhere they will definitely look should they ever need it?

That’s an expression of love in itself. And even if they don’t seem super-interested, it’s probably because they don’t want to think about your impending doom. That’s an expression of love, too.

And maybe they’re secretly paying attention.

Civil partnership

There’s a third way between marriage and unmarriage now available to anyone in the UK1 and that, of course, is civil partnership.

Legally you enjoy the same benefits as a married couple.

Psychologically, it may suit you better than marriage.

It all depends on the reasons why you and your partner prefer to cohabit.

I can only speak personally.

Mrs Accumulator and I ‘lived in sin’2 for 28 years. Marriage wasn’t for us for reasons that are personal and difficult to articulate.

Somehow a Civil Partnership doesn’t come with the same baggage. As a non-traditional institution, it seemed less rigid to us, and we felt freer to remake it in our own image.

I asked Mrs Accumulator if she’d like to ‘get civilised’ on Christmas Day 2020.

She said “Yes,” and we finally reached civilisation in a short, fun, and emotional ceremony in August 2021.

It was a great day spent in the delightful company of our close family. If anything it’s brought us closer together – another happy, shared memory, and another thing to rib each other about.

Meanwhile, in the back of my mind, I’ve quit worrying about all the faff I’ve spelled out in this post. Inheritance Tax, evil half-uncle Nigel, all of it.

Well, nearly all. You’ll still need Power of Attorney. And a will won’t hurt.

Take it steady,

The Accumulator

p.s. Final thoughts

Who am I? Jerry Springer?

I thought it’s just worth mentioning that the uncertainties and outright disadvantages of cohabiting can creep up on you.

One minute you’re a pair of moon-eyed lovebirds without a brass razoo between you. The next, you’ve mothballed your Tinder accounts and built a life together.

Yet the law gives you no claim on each other’s assets, whatever your intentions.

Youthful invincibility fades and assets accumulate. Protect them as best you can and keep each other safe. Don’t leave it to chance.

  1. If you’re over age 18 or over 16 with parent / guardian permission. I predict zero people between the ages of 16 to 17 are presently enjoying this article though, and rightly so. []
  2. That’s just my way of glamming it up a bit. I don’t believe in this sin BS. []
{ 27 comments… add one }
  • 1 JDW November 3, 2021, 9:53 am

    As one half of an unmarried couple in our late 30s, cohabiting with a mortgage and aim to have kids potentially soon with my long term partner of over ten years, this is an immensely useful and informative article @TA, thanks once again (and immediately forwarded to my partner).

    Lots of information I was vaguely aware of, plenty of things I wasn’t.

    A note of potential lack of balance or interest from partners. I tend to think I have the financial awareness and planning (or at least some, partly thanks to this brilliant website) but my partner isn’t particularly interested in financial planning, despite having far more in assets than me, to the point she could retire now (more through luck than judgement), but can be quite stubborn to the point of refusal or ‘later’ when I try and sit her down to discuss ‘the important boring stuff’. Any tips there?

    We’ve both got wills (I think) and certainly a deed of trust on the house (her deposit input was far greater than mine but we are joint owners) but nothing really beyond that that I know other than my FI plans which are generally on my individual accounts.

    I’m not particularly fussed about marriage (for many reasons, one of which is I hate the whole ‘woman as a man’s property’ etc), considering a civil partnership, if only for the admin benefits! How romantic!

    Thanks again.

  • 2 Jonathan B November 3, 2021, 11:10 am

    Just a word of warning. As I discovered dealing with my late mother’s affairs, life assurance policies written in trust can be a bit of a pain to deal with – at least on your own (I can’t help feeling they are designed to benefit fee-charging solicitors). And one which is an offshore life assurance policy puts you up for some quite complicated tax liabilities for the beneficiaries, even if they are less than the 40% that would have been paid in inheritance tax.

    The concept sounds very attractive, and from what I remember there are companies happy to set one up for you since you are paying – but then it isn’t as easy distributing the money.

  • 3 Al Cam November 3, 2021, 11:28 am

    Couple of additional points:

    a) the new state pension scheme (including accruals under the old state pension scheme) provides zero survivor benefit apart from the very few exceptions you linked to;

    b) db pension scheme survivor benefits are often rather more complex than summarised and e.g. may also: 1) depend on whether you are an: active, retired, or deferred scheme member; 2) contain a minimum payout term; 3) have particular provisions around tax free lump sums

  • 4 Alex November 3, 2021, 11:52 am

    For the Power of Attorney it’s worth pointing out that, at least in England, there are separate ones for Medical and Financial and that these do have to be registered formally. The people you’ve named need to be both aware and actually legal sign up to this – no surprising them with their role (and legal obligations).

    And as ever, the more complex the estate think about who you are delegating to and the support needed for it – don’t just drop a contractor ltd company, some business properties (commercial/fhl/btl), private investments, etc on an unsuspecting relative & expect them to be able to get the tax correct on them!

  • 5 Mr Art November 3, 2021, 12:12 pm

    The existing laws are less about prejudice about ‘living in sin’ and more about avoiding everything having to be decided in court, IMHO. Whether someone is a partner or not can be a grey area: people split up and get back together all the time. They keep their old houses when moving in together, etc etc.

    A legal declaration “yes, this person is my partner” is what’s needed, i.e. a marriage or civil partnership. Now that civil partnership is available to heterosexual couples, there’s no excuse not to avail of the legal protections IMHO.

  • 6 Factor November 3, 2021, 1:55 pm
  • 7 Whettam November 3, 2021, 2:16 pm

    @ TA this is a really important article and one all unmarried monevator readers, should read carefully. My wife and I were unmarried for about 25 years, I’m guessing for similar, difficult to articulate reasons as you and Mrs TA. We owned our house jointly and had a will, but that was it, no joint accounts, no PoA, etc. I pretty much did all the household finances.

    Then one day seven years ago, that SCENE sort of happened to us. My heart went ‘pop’ and I was in a comma for about three weeks. OK so no pantomime villain, the hospital never mentioned to (my now) wife that she was not my legal next of kin and my parents let her take the primary role in my care decisions. But my wife had no visibility of our finances at all, did the direct debits cover everything, how organised was I? Did she really want the amount of private equity I had bought for our portfolio’s? 😉

    Long story short, I came around and was OK, had surgery, recovered, etc. Once I was thinking again, we got joint accounts and then got married fairly soon after. Civil Partnerships were not an option for us when this happened, but if they had been we would have gone that route. I hope other monevator readers do not have to live through a version of the SCENE, but unfortunately this stuff does occasionally happen, even if you think it never will. So do you and your significant other a favour and go and set up that PoA, as @TA says don’t leave it to chance.

  • 8 Maureen November 3, 2021, 2:39 pm

    Another major benefit of getting married/civilised sooner rather than later relates to DB pensions. If you do the deed after you have retired you may find(depending on the pension fund scheme rules) that your spouse will not get a full widower/widow ‘s pension. My father paid for widows benefit throughout his working life. My mother, his first wife, died after he retired. He married again and died 10 years later. My step mum got a discretionary widows pension worth half of what it would have been if they had been married before he retired. She wasn’t dependant on him as she had her own pension so could not make a claim against the scheme on that basis.

  • 9 Dean November 3, 2021, 2:39 pm

    Very informative article that clearly took much work.
    “In the immortal words of Beyoncé’s accountant, if you don’t want to pay inheritance tax then: “you shoulda put a ring on it.”” Better example, do a Ken Dodd !
    It’s not actually the case that staff at HMRC individually check all IHT returns or asset valuations routinely. However, valuations for IHT purposes should be treated with the same care as data in a personal tax return. You have to be able to justify each and every valuation if necessary ie in the event HMRC make enquiries. What that involves depends on the asset/item of property and the overall context and value of the estate. There’s guidance on this but you don’t always for example need an estate agent property valuation.
    The reason tax and other law discriminates against unmarried couples (or more accurately, only benefits married couples) is public policy. To encourage marriage and stable relationships, including for children. Whether we agree that’s a legitimate aim or not, it’s not outrageous in any sense. Presumably whether it continues depends on whether the long term decline in the marriage rate continues. Single people not in a relationship similarly can’t on death benefit from advantages and exemptions available only to the married.

  • 10 Neverland November 3, 2021, 5:10 pm

    @Accumulator

    Instead of writing a very long article, why not just get married?

    I don’t really get why people who live together for a long time don’t want to get married

  • 11 JDW November 3, 2021, 5:58 pm

    @Neverland

    I obviously can’t speak for @TA who has stated he has his reasons but won’t go into them.

    As someone in a long term relationship but not thinking about popping the question, for me, it’s like this:
    – Marriages don’t always last forever. For me, committing to a 25 year mortgage and potentially kids with my partner is a much stronger sign of commitment than a piece of paper and a big day.
    – I don’t want my partner (female) to take my name, or feel like she should. She is her own person. I see marriage as an outdated concept, back to a time when women were passed from father to husband.
    – If we *did* decide to get married, I would have a very, small ceremony. A civil partnership potentially ticks all the boxes for us, I think, if needed. Partly a it’s personality thing, but I can’t stand the us-us-us of big lavish weddings and the potentially bridezillas or huge costs involved in the often illusion of showing off the ‘perfect day’. Each to their own I guess. A couple of friends I know got married a few years ago, spent £20-£30k on the wedding. They are both divorced now. We spent a year travelling a few years ago, spending half the money. I know what I would rather do.
    – I absolutely *hate* the conformity/expectation/societal pressure. Why should it matter, other than to the people involved (and perhaps HMRC??) Why should I do what other people expect of us? Hate it when people say, ‘oh, you guys next’. I’m quite happy as it is, thank you! 🙂

  • 12 TARDIS November 3, 2021, 7:47 pm

    @TA belated congratulations on becoming “civilised”!
    I hope you have made a new will as I think the old one is revoked on marriage/civil partnership?

    Great advice to everyone to get PofAs too.

  • 13 Steve November 3, 2021, 11:39 pm

    @JDW. Couldn’t agree more with that summary of why marriage isn’t for everyone.

    @TA. I’m unmarried and own a property with my other half as joint tenants. There’s a mortgage in our joint names too. If I die, does the value of the mortgage come off the value of ‘my’ 50% of the house before assessing if the IHT threshold has been met? In our current situation it would be the difference between IHT being and not being payable at all. No pressure but depending on your answer I may have to propose to her tomorrow (ok, that bit is a joke)

  • 14 Gettingwiser November 4, 2021, 7:54 am

    Thanks for writing such a great article TA I really appreciate it – you’ve provided lots of useful information to ponder over, and huge congratulations to you and Mrs A for getting civilised 🙂

    I totally agree with you that unmarried couples are treated as second class citizens, and to me it really is a form of discrimination. You are treated as second class for inheritance tax purposes, but if you need to go on universal credit post losing a job your partner then becomes a first class citizen and is expected to pay for you….it’s not that we wouldn’t ….it’s just the unfair treatment that grates.

    Great advice on powers of attorney and getting a will thank you. It seems to me the simplest thing to do without getting technical (and paying for lots of advice) is to stash your cash in a pension and to live in a cheap house.

    This is fine for me but my younger partner is also hoping to fire which means stocks and shares isas need to be utilised and then the state can get their hands on it if my ‘partner died yesterday’ – no getting away from that I guess other than life policies which I’ll need to research. Also another thing on my list is what happens if one of you needs to go into care – so much to think about!

    Thanks again for the lovely article

  • 15 JimJim November 4, 2021, 8:11 am

    An absolute classic @TA, I read it for the information (Wed twice in the same day here) and stayed for the comic style of delivery. Brilliant.
    Weddings are not for everyone, I get it, but it makes a lot of things more simple. Still, I would not do it ever just for tax purposes 🙂
    JimJim

  • 16 The Investor November 4, 2021, 9:57 am

    FAO all: @Neverland’s second reply deleted as it’s a classic argumentative reply written without sensitivity about a difficult subject on a well-mannered thread.

  • 17 The Accumulator November 4, 2021, 1:30 pm

    @ JDW – yes, lots of overlap there between your reasons for remaining unmarried and ours. I hesitate to offer any tips re: persuasion. My track record is mixed. One possibility though is to talk about the underlying reasons that explain why you’d like to have a plan. On the one hand, it’s simply prudent. But that doesn’t necessarily wash for people who don’t like thinking about or discussing money. What may be more engaging is the emotional drivers behind it all. Many of us here are planners. Our desire to plan ahead may be related to upbringing, personality, our notions of security – possibly born from past experience. I think each of us has a deeply personal human story that might look like an obsession with spreadsheets but can be expressed in other ways when relating to others.

    @ Jonathan B – thank you. I didn’t have time to look too closely under the life assurane rocks but it looks like a complex area.

    @ Whettam – God, that must have been scary as hell for you both. Thank you for bringing your real life experience to bear on that point.

    @ Al Cam and Maureen – cheers. I guess best advice for each individual is to dig out their pension scheme’s rules and see what the provisions are. And double check they know your partner’s name. Mrs TA’s scheme seemed to scrub my details at least twice in some administrative cock-up. Either that, or she did it. Hang on a sec…

    @ Dean – thank you for those excellent points. I do think the intestate law on this point is absurd but I can see it’s also difficult to resolve cleanly. Hopefully Civil Partnerships will help but it’s interesting that a courageous couple had to drag the government to court so we could all have that right.

    @ Tardis – Bloody hell. It looks like you’re right about the will being automatically revoked. I had no idea about that. Cheers!

    @ Steve – It makes sense that if the mortgage was set up so the debt is 50% yours then it will come off your 50% of the house value. However, every time I researched any aspect of this topic, I kept finding nuance and exceptions. My best advice is to do a little digging to match the reality to your personal situation (and contractual small print) before you do anything so dramatic as proposing 😉

    @ JimJim – Cheers! However, in your comment you say: “Wed twice in the same day here.” You are in demand!

  • 18 JimJim November 4, 2021, 3:42 pm

    @TA, a religious requirement for my wife’s faith was the second wedding, the first had to be at a registry office. So yes, I was in demand, and luckily, Mrs JimJim didn’t change her mind between the two.

  • 19 David November 4, 2021, 8:00 pm

    Thanks for the article @TA, very relevant and useful to us as another long-term unmarried couple.

    Worth point out that there are a few areas where being unmarried is an advantage because a married couple counts as a single unit – for example, you can buy a second property without paying the additional stamp duty if you get the ownership structure right. So if you’re planning to get a holiday home or BTL investment, buy it before you get married!

    And thank you @TI for your timely deletion 🙂

  • 20 The Accumulator@gmail.com November 5, 2021, 2:11 pm

    @ JimJim – What a day that must have been! You’re not quite the rogue I had you down as 😉

    @ David – I did not know that. A rare score for the unmarried 🙂

    I’ve just started nosing around the topic of long-term care. I would guess that marriage status also makes a difference there when local authorities assess our finances.

  • 21 blaine wheeler November 5, 2021, 3:34 pm

    Thank you for the excellent article. Speaking from the US – everything you say is also true here; times 51. The feds and every state have different estate tax thresholds and rules after intestate death so WE SHOULD FOLLOW YOUR ADVICE.

    Get a will, and both medical and financial powers of attorney even if you are not married. If you have children, do the paperwork even if you are not married.

  • 22 Factor November 5, 2021, 7:00 pm

    Another important point concerning Wills is the need to include nominated guardians for any of your children who are minors, in case you and your spouse/partner both perish before the children are legally adults. Choosing the guardians is not necessarily an easy task but failing any nomination the child(ren) would become the responsibility of the local council’s Social Services Department.

  • 23 Reactionary November 6, 2021, 1:40 pm

    Useful information no doubt to those unwilling to get married. One does make their lifestyle choices and as always there is consequences, pro’s and con’s, the responsibility of one to find out such information.

  • 24 soicowboy November 6, 2021, 5:16 pm

    My partner and I are in another situation where there is immediate benefit to being unmarried. A quarter of her state pension is based upon the employment contributions of her former husband. If we should marry her pension would reduce by about £40 per week and thus her financial independence would be compromised.

  • 25 Xenobyte November 7, 2021, 11:00 am

    Thanks for the great effort you clearly put into this article, although it did give me quite a sleepless night!

    As others have mentioned, it does draw a light on the inequalities in our current tax system. A particular gripe of ours is the tax implications of leaving our assets to each other or our nieces and nephews (and hence being penalised for not being blessed with children). Our feeling is that an IHT system based on the individual and assets is long over due. The declining rate of marriages coupled with continued property price inflation suggests that is inevitable…

    https://www.statista.com/statistics/281533/number-of-marriages-in-the-united-kingdom-uk/

  • 26 The Accumulator November 7, 2021, 11:05 am

    Thank you, Xenobyte – and sorry about that! I agree that the situation will improve eventually. Social change is the leading indicator. Institutions and the law are dragged along in the wake of society.

  • 27 platformer November 7, 2021, 1:22 pm

    Another benefit of marriage is spousal privilege (i.e. your spouse cannot be forced to testify against you). This is effectively the state saying the duty you owe your spouse is greater than the duty you owe the state / society / justice. It is the only non-professional relationship that benefits from privilege, which notably does not extend to parent-child relationships.

    I am not inclined towards marriage, however I also respect an institution that has existed since at least c.2300 BC and has played a crucial part in human development. Marriage rates started declining in the 1970s so its 50 years vs 4,300+!

    I expect the core value component is something to do with protecting children. It is interesting to note that the first reason given for marriage in the standard wedding prayer service is “for the procreation of children” (to avoid sin comes second) and Article 16 of the Declaration of Human Rights refers not only to the right to marry but also the right “to found a family”.

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