Inheritance tax shock: 175,000 over 70 years threatened by high bill - "It may be necessary to sell the house"

Inheritance tax shock: 175,000 over 70 years threatened by high bill – “It may be necessary to sell the house”

People over the age of 70 choose to live with their partners rather than enter into a real marriage or civil partnership. While it may seem that at this age all romance is without the paperwork of a traditional relationship at this age, it could have dire consequences if one of them died.

Since 2002, the number of people over the age of 70 living with a partner has risen by an incredible 288 percent.

In 2002, 45,066 people over the age of 70 lived with their partner in England and Wales without being married or in a civil partnership.

In 2020, that number was a staggering 175,028.

Undeniably, this demonstrates a change in expectations of what the relationship might look like. However, many couples may not fully understand what they are risking.

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Marriage is generally in decline, and other lifestyles, such as cohabitation, are slowly gaining ground in the popularity ladder.

However, in a somewhat modern society, certain rules and regulations are now lacking in this regard, and the British are suffering the consequences if they are not careful.

Ellie Sawkins, an investment analyst at the Wealth Club, said: “People over the age of 65 are getting married and divorcing more than ever, creating a whole generation of silver connectors and dividers. But this growing demographic group may unknowingly put their partners’ homes at risk.

“Houses of unmarried couples are subject to inheritance tax when one of the partners dies and leaves their share of the joint living to the surviving partner. This tax liability would be due within six months, so for many it could mean that in addition to dealing with the loss of a loved one, they are forced to sell their house quickly. A quick sale will almost inevitably mean the need to reduce the price of real estate, which is a double blow to those who are already mourning the loss of a loved one. Roommates really need to think about how to deal with this problem.

“While marriage and civil partnership are not the right thing for everyone, they can offer significant inheritance tax benefits. However, there are dangers. An unmarried marriage could lead to your children losing the legacy you wanted to leave from a previous relationship, as your property will be transferred first to your new partner and potentially to their children in the event of their death. It is important that you clearly state your intentions in the will. “


There are many ways to avoid a bold inheritance tax bill, one of which is to use a spouse or civil partner as the sole heir.

However, without a real marriage or civil partnership, this method and others like it will be useless.

Ben Alcock, Continuum’s independent financial advisor, said: “Although there may be social and other obligations, without a formal marriage or civil partnership agreement, there are few automatic rights to money or even things like a shared home.

“If one of the partners owns the property only in his name, the surviving partner does not have a clear right of ownership or a right to housing if the owner dies.”

Although this certainly seems outdated and unreasonable, from the point of view of inheritance law, a blood relative who has not spoken to the deceased for decades would have more rights to the estate than a partner living in the same household.

Even a treasurer could claim more legal property rights than a highly beloved partner.

However, Mr Alcock noted that this was not an ultimatum that would force couples to enter into a marriage or civil partnership, and that other things could be done.

For example, arranging for a house to be jointly owned on first purchase can, in the worst case, ensure that neither couple is left homeless.

However, this does not eliminate the tax burden of inheritance.

Mr Alcock continued: “When one of the unmarried couple’s partners dies, their property becomes liable for IHT from any property beyond the IHT contribution. Worse, the IHT will be due before the assets can be transferred, potentially leaving a fat tax account for the estate. The surviving partner may inherit less than they expected. They may have to sell the house they shared to pay for it. ”

Another way to avoid this inconspicuous problem is proper succession planning.

Mr Alcock explained: “Succession planning is a complex area and requires in-depth knowledge of taxes and many other areas where rules and regulations have accumulated. Independent financial advisory firms like Continuum can provide you with the expertise you need and work with other professionals, such as your lawyer and accountant, to get the result you and those you leave behind really want. ”

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