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  • FIRST POST
    • Pullingmyhairout2
    • By Pullingmyhairout2 5th Oct 17, 7:15 AM
    • 9Posts
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    Pullingmyhairout2
    Co-hab or Marriage for IHT purposes
    • #1
    • 5th Oct 17, 7:15 AM
    Co-hab or Marriage for IHT purposes 5th Oct 17 at 7:15 AM
    Long story short I want to mitigate IHT liability to my partner if I die.!

    We are currently not married. Moving in together in a few weeks!when the house finally completes! House will be in my name for financial reasons currently, unlikely to change for 10 years at least.

    Both of us have children from a previous relationship, mine will live with us, his will not (grown up).!

    With life cover etc if I died today my estate will be well in excess of IHT levels even putting some of the life cover in a discretionary trust for the kids.!

    Only way around a lot of this by the look of this is to get married to ensure my partner benefits from a transfer of property with no tax charge at the time of my death.

    Anyone got any other suggestions before I have this conversation?

    Both of us have screwed up twice already so we are naturally being cautious.
Page 1
    • Keep pedalling
    • By Keep pedalling 5th Oct 17, 9:27 AM
    • 4,081 Posts
    • 4,441 Thanks
    Keep pedalling
    • #2
    • 5th Oct 17, 9:27 AM
    • #2
    • 5th Oct 17, 9:27 AM
    Hopefully you are now both older and wiser, so won't screw up for a 3rd time .

    For IHT purposes being married has some big advantages if your estate is in that territory, but are you sure you are actually in that position? Life insurance is usually written in trust so does not form part of the estate.

    Whether you eventually marry or not you should make sure you both have wills in place.
    • Brighty
    • By Brighty 5th Oct 17, 9:43 AM
    • 730 Posts
    • 379 Thanks
    Brighty
    • #3
    • 5th Oct 17, 9:43 AM
    • #3
    • 5th Oct 17, 9:43 AM
    You're only just moving in together and you're considering leaving everything to him? What about your kids? If he gets everything, he could quite easily disinherit your kids
    • Pullingmyhairout2
    • By Pullingmyhairout2 5th Oct 17, 11:23 AM
    • 9 Posts
    • 1 Thanks
    Pullingmyhairout2
    • #4
    • 5th Oct 17, 11:23 AM
    • #4
    • 5th Oct 17, 11:23 AM
    My estate definitely is going to be very over IHT limits (which is great but also rubbish at the same time). Which does include three properties, savings and life insurance (one covers mortgage, one fib until my youngest is 25 in discretionary trust).


    My children are more than adequately provided for on the event of my death, and that is being dealt with by a discretionary trust.


    Although my partner and I are only just trying to move in together it is only down to the fact that my job has kept us at other ends of the country (We re-found each other a couple of years ago, and were together for 3 years when much younger - pre screw up's). Marriage is not something either of us care much about to be honest. It is but a bit of paper, and it would not be happening yet anyway because we both might hate living together but I need clarity in my head of the best way forward in the next couple of years if we have not killed each other on the domestic front!
    • Pullingmyhairout2
    • By Pullingmyhairout2 5th Oct 17, 12:05 PM
    • 9 Posts
    • 1 Thanks
    Pullingmyhairout2
    • #5
    • 5th Oct 17, 12:05 PM
    • #5
    • 5th Oct 17, 12:05 PM
    Brighty, the discretionary trust that is in place for the children has a different trustee than my partner. My biggest problem is that I have no family of my age or younger and I don't have friends close enough to trust. I have known my partner for over 20 years - 5 of those we have been together (just that 3 of those was over 20 years ago!). It is not a 'fly by night' relationship it has just been slow to burn!


    I am currently thinking long term spurred on by the diagnosis of my friend of stage 3 cancer with secondaries, the fact that my parents are both very ill and my Nan is 92. I stand to inherit that in the future as well - although I am trying to persuade them to change their will and leave their wealth to my children instead which would at least mitigate some liabilities there. Problem is one of my children is nearly voting age, and the other is substantially younger.


    I have thought about leaving everything to the children alone with my partner having a life time interest in the property. However this still leaves an issue with IHT.
    • getmore4less
    • By getmore4less 5th Oct 17, 12:10 PM
    • 30,795 Posts
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    getmore4less
    • #6
    • 5th Oct 17, 12:10 PM
    • #6
    • 5th Oct 17, 12:10 PM
    The key benefit to marriage are spouse exemptions and transferable nil rate band.

    The spouse exemption can still apply to assets left in an IPDI trust for the kids like the main residence.

    The transferable nil rate band is useful if you don't use it all up by giving assets to other than spouse.

    the joint nil rate bands are growing to £1million from £650k with a property involved.

    All the life cover should be in trust even if it is destined to cover the mortgage that should be done outside the estate, the estate benefits from the debt to reduce IHT liability.
    • getmore4less
    • By getmore4less 5th Oct 17, 12:13 PM
    • 30,795 Posts
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    getmore4less
    • #7
    • 5th Oct 17, 12:13 PM
    • #7
    • 5th Oct 17, 12:13 PM
    Inheriting even more assets than you want can be resolved with deed of variation.
    • Pullingmyhairout2
    • By Pullingmyhairout2 5th Oct 17, 12:32 PM
    • 9 Posts
    • 1 Thanks
    Pullingmyhairout2
    • #8
    • 5th Oct 17, 12:32 PM
    • #8
    • 5th Oct 17, 12:32 PM
    Mortgage Cover is assigned to lender currently.


    I forgot about the deed of variation option, and I didn't know about the IPDI option. I think that is the way I will have to go. Thank you for your help. It has answered my question in it's fullest, and I appreciate that.
    • getmore4less
    • By getmore4less 5th Oct 17, 1:30 PM
    • 30,795 Posts
    • 18,405 Thanks
    getmore4less
    • #9
    • 5th Oct 17, 1:30 PM
    • #9
    • 5th Oct 17, 1:30 PM
    Research it further it can get complicated,

    like what happens to assets that are in a IPDI trust and the OH want to let them go.

    what if you use up your transferable nil rate band use a IPDI trust and his estate is subject to IHT which bits get to pay the tax.
    • Pullingmyhairout2
    • By Pullingmyhairout2 5th Oct 17, 1:45 PM
    • 9 Posts
    • 1 Thanks
    Pullingmyhairout2
    I will look into it fully. As you can probably tell I like to take my time about things!
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