Changes in Inheritance Tax legislation fails to apply to co-habiting couples. BLM explains why having a will is essential
There’ll be a welcome sigh of relief in many a grieving household today as 6 February 2020 marks the date when new Inheritance Tax legislation comes into effect, with protection increasing for those who are left behind should their partner die intestate as the threshold at which Inheritance tax kicks in for assets lifts from £250,000 to £270,000.
A welcomed relief to some – but the new legislation fails to apply co-habiting couples, which is sizeable group to exempt, probably representing hundreds of thousands of unmarried, cohabiting couples. Compare this to married or civil partnered couples, where if a spouse dies intestate, the surviving spouse is entitled to the first £270,000 (from 6 February 2020) and half of the remaining estate, plus household goods. The other half will be shared amongst the deceased’s children, on what is known on the statutory trusts until they are 18.
This change in the law has been a long time in the making. The threshold was last looked at in 2014 and was due to change last year, but the government’s focus has been on delivering Brexit.
The only way to protect against intestacy is to have a valid will.
One of the most important, though nonetheless difficult, conversations to have with your partner is what needs to happen if one of you passes away. Personally I think death is just such a complicated, uncomfortable topic for many people to talk about but it’s inevitable for all of us. Preparing one can be easy to put, but it’s the only way you can ensure your wishes are protected and your partner is cared for. So it really is a case of ‘if not now, when?’
It’s especially significant to have a will if you aren’t married, as there are many misconceptions around cohabitation. The notion of common law marriage is a myth. If you die without a will – dying intestate – your partner will receive nothing under the laws of intestacy.
If you already have a will, ensure it’s watertight and updated any time there’s a significant change in your personal circumstances, such as divorce or separation. The process is relatively straightforward. You need to ensure that you seek proper legal advice from a suitably qualified solicitor who will guide you through the process to ensure that your individual needs are met, and ensure you; your partner and your family are protected. Again, remind yourself – if not now, when?
Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to customers of BLM. Specialist legal advice should always be sought in any particular case.