You may have included your loved ones in your Will – but have you considered the Inheritance Tax position?
We recently helped an unmarried couple draft their Wills, and in doing so, allowed them to mitigate a tax burden of over £40,000. With their permission, we are now sharing their story.
The couple have blissfully shared their lives together for over 40 years as unmarried cohabitees. Prudently, the couple came to us to prepare their Wills, as the law makes no automatic provision for unmarried cohabitees on death.
The couple wished to protect their respective children’s inheritance by their Wills. But one of the partners, who owned the family home solely in their name, also wished to make provision for the surviving partner to have the benefit of living in the property for the remainder of their lifetime.
We advised the couple that the Inheritance Tax treatment of assets for couples passes to the survivor, and the executors can aggregate both allowances to set against the estate of the surviving individual. Unfortunately, however, these tax advantages are only available to couples who are married or in a civil partnership.
Put simply, the consequence of this for our clients was a potential £48,000 Inheritance Tax liability arising on the property owner’s estate.
Our advice to the couple was that they consider entering into a marriage or civil partnership to mitigate the tax burden, and for the couple to make their Wills in contemplation of the forthcoming marriage or civil partnership. This would also save their Wills from revocation when the ceremony takes place.
When the couple met with us to sign their Wills, we were delighted to hear that they had booked their Civil Partnership. Their special day is set to take place this spring, and we send them our best wishes and congratulations.
How Can We Help?
Are you considering writing (or updating) your Will? As part of our professional Will Writing Service, we consider various elements of background information, including the Inheritance Tax position. Speak with our team on 01743 248545 for more information.
