Wills and estate planning for unmarried couples
Did you know there's no such thing as a "common law marriage"? Know the pitfalls and don't get caught out!
This month's "Life Matters" article by Lester Aldridge is yet another timely one. For many good reasons (not to mention postponements due to Covid!) an increasing number of couples prefer these days not to get hitched. These wise words from Parisa Jones will ensure you don't lose out in certain eventualities.
Also remember that there's always help on hand at Lester Aldridge from an experienced solicitor in any area of the law, pick up the phone to them about any legal matter which concerns you!
Call 01202 702612 now to discuss Tax, Trusts, Wills, Probate and see other numbers below.
Wills and estate planning for unmarried couples
Contrary to popular belief, in this country there is no such thing as a “common law marriage” or a “common law spouse”. Your legal rights as part of a couple will depend upon whether you have married or formed a civil partnership or whether you are unmarried.
It is important for unmarried couples to understand their position and seek appropriate advice. Taking simple steps can help avoid a lot of shock and upset because of some common misconceptions. Regardless of how long you have been together, whether or not you have children and how committed your relationship might be, the law treats unmarried couples differently.
From an estate planning perspective, unmarried couples should consider the following:
If you do not make a Will, the rules of intestacy will apply to your estate. Legislation sets out who is entitled to administer your estate, who is entitled to inherit and to what extent.
The rules of intestacy do not make any provision for unmarried partners. The only way you can therefore make provision for your partner is to make a Will. You should consider:
- Who you want to administer your estate;
- The appointment of guardians for children under the age of 18;
- The extent you want your partner to benefit – do you want to leave them assets outright or, for example, just the right to continue living in your home?
If no provision is made, a partner may make a claim on your estate. This can be expensive and can cause a lot of stress and upset for those involved.
Couples who are married or in civil partnership benefit from:
- Spousal exemption – assets can pass between the couple without any Inheritance Tax;
- A transferrable nil rate band – if the nil rate band (the maximum amount that can be left free from Inheritance Tax) is not used when the first spouse passes away, it can be claimed on the second death; and
- Subject to strict criteria being met, there may also be a residence nil rate band and transferrable residence nil rate band to be claimed (an additional allowance based on ownership of a residential property).
As an unmarried couple wanting to provide for each other, there is only a nil rate band available and this cannot be transferred to a surviving partner.
It is therefore advisable for unmarried couples to seek Inheritance Tax advice and plan their estates in the most effective manner. An Inheritance Tax bill can sometimes have substantial consequences to a surviving partner being able to maintain their standard of living or even being able to continue to live in their home.
For many people, the family home is the biggest asset and it is important to protect your respective interests.
I recommend having Declarations of Trust in place. A Declaration of Trust is a document setting out beneficial interests in a property. They can be simple and just set out how net sale proceeds will be divided or be more comprehensive and set out each party’s rights and responsibilities.
If the property is only owned by one party, this can have a significant impact on the survivor’s right to live in the property after the owner’s death. It is therefore important to ensure that the survivor has clearly defined rights in respect of the property and occupation.
For more information and advice, contact Lester Aldridge to speak to one of our experienced solicitors.
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Life Matters is a regular monthly feature on Lymington.com, which covers a wide range of legal subjects and is always written by one of the Lester Aldridge team. You can see a list of all published articles by clicking to the Lester Aldridge Solicitors webpage on Lymington.com here.