Inheritance tax and unmarried couple

Bod_1234

My partner and I have been together for 28 years.  We aren't married, we both have wills where everything goes to the other person.

Assets, our house is mortgage free and worth about £270k, and I have other assets in the region of £100k

Is there a risk that because we aren't married, the tax man might benefit in the form of inheritance tax?

Is there any other things we risk losing out on by not being married?

Thanks.

Brie

is there anyone who might possibly contest your wills?  any children or other close relatives?  they may not have a claim of course but it would be a hassle to deal with at a difficult time for the survivor.

DevilsAdvocate1

I think the other thing to consider is what would happen if one of you becomes seriously ill.  You might not be classed as next of kin, and other blood family, such as siblings or parents would make the decisions.

This happened to a friend of mine.  Her partner was diagnosed with terminal cancer.  They thought that he would have around a year with chemo.  However, he died 2 days after his 1st chemo, just a couple of weeks after diagnosis.  Because they weren't married. his mum got to make all the decisions regarding the funeral.  She arranged to have him buried even though he had told my friend he wanted to be cremated.  His mum didn't like my friend, and did not tell her the date or time of the funeral.  She found out the day before only because his sister rang her.  His sister was disgusted with her mum for not inviting K.

A couple of other things happened.  K. took out a car loan for her partner because he had a bad credit rating.  The car was in his name.  Initially, the mum got the car and K. had to prove that really it was hers.  It took a solicitor's letter to sort this out.  I think there was an issue with the pension, but I'm not sure on this.

If you have any children, you need to make sure both of you are on the birth certificate.

Bod_1234

Brie said:

is there anyone who might possibly contest your wills?  any children or other close relatives?  they may not have a claim of course but it would be a hassle to deal with at a difficult time for the survivor.

No children, nor nobody else that would likely contest a written will.  They were written by us in sound mind and the few reasons a will could be contested wouldn't apply.

Mojisola

There's always the option of a civil partnership if you don't like the idea of being husband and wife.

That would protect you against any future changes to the tax laws, give you rights where health issues and post-death potential problems are concerned and secure any pensions that might pay out.

Whatever you decide about your relationship, it's worth making POAs nominating each other as your attorneys (plus some back-ups in case you both become incapacitated).

Keep_pedalling

You estates are currently too small to be impacted by IHT unless your partner has significant assets you have not mentioned, but you unmarried status could seriously impact your ability to inherit each other’s pensions. 

Bod_1234

Keep_pedalling said:

, but you unmarried status could seriously impact your ability to inherit each other’s pensions. 

How so? I have nominated my partner on my private pension, and she has done the same on hers.  Is there another aspect we need to know?

Keep_pedalling

Bod_1234 said:

Keep_pedalling said:

, but you unmarried status could seriously impact your ability to inherit each other’s pensions. 

How so? I have nominated my partner on my private pension, and she has done the same on hers.  Is there another aspect we need to know?

Depends on the type of pension. Traditional company DB pensions usually only pay out to a spouse or civil partner so if you have one of those check the pension scheme rules closely.

Marcon

Keep_pedalling said:

Bod_1234 said:

Keep_pedalling said:

, but you unmarried status could seriously impact your ability to inherit each other’s pensions. 

How so? I have nominated my partner on my private pension, and she has done the same on hers.  Is there another aspect we need to know?

Depends on the type of pension. Traditional company DB pensions usually only pay out to a spouse or civil partner so if you have one of those check the pension scheme rules closely.

That used to be the case but nowadays many schemes will pay out to a partner where the parties are living in 'a relationship akin to marriage' (or similar wording) - but that is usually a discretion, not a right, so the point is well made and well worth thinking about for anyone who has DB benefits.

Keep_pedalling

Unlike so many unmarried couples it is great that you have wills in place, but death is not the only event that can cause you issues. Have you also put lasting powers of attorney in place? This is something all couples should do, but it is probably even more important if you are not married.

Pennylane

Keep_pedalling said:

Unlike so many unmarried couples it is great that you have wills in place, but death is not the only event that can cause you issues. Have you also put lasting powers of attorney in place? This is something all couples should do, but it is probably even more important if you are not married.

If an unmarried couple have no parents still alive and no children is it still important for them to have POA in place and, if so, why please?