// Irwin Mitchell IRWIN MITCHELL - PRIVATE WEALTH
Cohabitation v Marriage: what the differences can mean for you
to make the maximum use of their annual allowances and lower rates of tax when those assets are sold. This is a break not given to unmarried couples.
For older couples who are not married but are living together, there is the risk of dying intestate or having not updated their will to include the partner they lived with. This can mean that if one partner dies and is separated but not divorced from a former spouse of theirs, any assets and wealth will pass on to their spouse, or commonly their children, rather than the partner they live with if no provisions are made in a will.
Gavin Faber, a Partner in the Will, Trust and Estate Disputes team, said: “Without any provision, cohabiting partners can be left in financial peril, and in the worst cases, destitute. Their only remedy may be to bring court proceedings for financial provision against their partner’s estate at a time when they are emotionally fragile having lost a loved one. This is not only stressful and upsetting, but can prove costly and lead to a lengthy period of financial uncertainty.
Gavin Faber, Partner in the Will, Trusts and Estate Disputes team at Irwin Mitchell Private Wealth, explores the issues this can cause couples and their families.
Deciding whether or not to get married is an extremely personal choice, and to some couples might be their least- preferred option. The concept of cohabiting presents many benefits: thousands of pounds saved from not having a wedding and a stress-free split if a couple decides to part ways. However, there is no denying that the state is in favour of marriage, and there may be more benefits to getting married the older that you get.
When it comes to the tax implications of marriage versus cohabiting, marriage is the clear winner. Married partners receive inheritance tax breaks which cohabitating couples are not entitled to: spouses can transfer wealth to their partner without any inheritance tax, and they can transfer any remaining inheritance tax thresholds to their spouse. Cohabitating couples do not have either of these breaks.
Married couples can also transfer assets from one to the other, or share them, without capital gains tax, allowing them
Moreover, any claim brought by a cohabiting partner against their partner’s estate is limited to meeting their maintenance needs which can mean little more than sufficient to meet their day to day living expenses.
A spouse on the other hand may well inherit their partner’s estate automatically under intestacy, and even if they do not, they will be afforded more in a claim for financial provision against their partner’s estate. Such claims are not limited to meeting their maintenance needs.”
It is clear that the bias towards married couples over those who are cohabiting is outdated and does not reflect the reality of modern society. Increasingly, couples of all ages are choosing cohabitation and are in need of legal guidance, but we especially urge the older cohort to seek specialist advice as older couples may sadly lose their partner and see no rights to their partner’s estate.
“The law should be updated to reflect modern attitudes so that cohabiting couples are not at such a great disadvantage. The current message that both the law and the state send out is that marriage is the only way to be legally recognised as partners, which couples may not find suitable to their lifestyles.
We can support you, your family and business with important decisions to ensure that your future plans are realised and brought to life. Exploring your options can go a long way and allow you to have clarity, peace of mind, and focus on the important things in life – Irwin Mitchell Private Wealth are best placed to achieve this for you.”
For further information contact Gavin Faber on 0121 203 5366, or 0370 1500 100 Extension: 5366, or by email
gavin.faber@irwinmitchell.com
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