The ‘hidden benefits’ of marriage
With the recent engagement of Prince Harry and Meghan Markle, it feels like the whole world is talking weddings. And while, no doubt, the main focus of discussion at present is the dress, the ceremony and the guest list, the wedding fever provides a good opportunity to remind ourselves of the ‘hidden benefits’ of marriage.
As well as committing to spend the rest of your life with the person you love, there are a number of financial benefits to entering into a marriage which are not available to unmarried co-habiting couples.
On death, assets that pass to a surviving spouse are free from inheritance tax but this is not the case when assets pass to a co-habitee. In a similar way, there is no inheritance tax or capital gains tax payable on gifts made by one spouse to another during their lifetime but there may be tax payable if they are not married.
Everyone has a personal inheritance tax free allowance, currently worth £325,000. If a spouse leaves part of their estate to their surviving spouse then they will also inherit the unused tax free allowance. As such, up to £650,000 of the surviving spouse’s estate may be free from inheritance tax when they die. Co-habitees do not inherit their partner’s unused personal allowance in this way.
This year, a further inheritance tax free allowance of £100,000 has been introduced for a person who leaves their home to a direct descendent, such as a child or grandchild. If the first spouse to die does not use their allowance then this can be inherited by their spouse. Once again, this is not the case with unmarried couples.
While of course the decision to marry should always be based on the desire to make a lifelong commitment to one another, there are significant tax benefits which come as an added advantage. For any advice or clarification on your tax situation, expert advice should always be taken.
Sophie Robinson is a Wills, Trusts and Probate specialist at Newcastle law firm Sintons. To speak to her about this or any other matter, contact Sophie on 0191 226 7812 or firstname.lastname@example.org.