"I wish never to be parted from you from this day on" – Mr Darcy, Pride and Prejudice
Until 1935 a married woman did not have the freedom to leave her estate to beneficiaries of her choice in her will. Her husband had an interest in her property after her death, known as 'by the curtesy'. Thankfully for wives this is no longer the case; however there are significant differences in the treatment of estates for couples that are married or in a civil partnership, and couples that cohabit.
We look at five things that will change when you marry or enter into a civil partnership with your beloved:
- Your will becomes invalid - your existing will is automatically revoked (cancelled) when you marry, unless it is recorded somewhere in the will that you are making it in contemplation of marriage/civil partnership with a particular person.
- But… a will made after your marriage remains valid if you divorce – any gifts to your former spouse are treated as though your spouse has died before you. The same principle applies if you have given them responsibility for administering your estate. Other provisions in your will still take effect.
- Intestacy rules - if you die without a will, your assets in the UK will be divided in accordance with the intestacy rules. Any assets you have overseas will be dealt with in accordance with the law in that country. Depending on the value of the assets in your estate, your spouse might have to share your estate with your children or, with your siblings or parents if you do not have children. If you are unmarried, your co-habiting partner is not entitled to anything under the intestacy rules (although they might be able to bring a claim for financial provision from your estate – see 4 below).
- Claims on your estate - if your will or the intestacy rules do not make adequate financial provision for your spouse or loved ones, the disappointed parties can consider a claim under the Inheritance (Provision for Family and Dependants) Act) 1975. A claim can be brought by your spouse/civil partner, your co-habiting partner (provided they have lived with you for two years before your death), your children, any former spouse (depending on the terms of the divorce settlement) and anyone who considers they are 'maintained' by you. In a majority of cases a spouse/civil partner will receive greater provision than other claimants because their claim is not limited to their maintenance needs (i.e. day to day costs of living).
- Tax advantages – every individual has an inheritance tax allowance, currently £325,000. Any assets in excess of this threshold are taxed at 40%, subject to applicable tax reliefs and exemptions (e.g. Agricultural Property Relief). Anything you leave to your spouse or civil partner on your death will not attract inheritance tax. Furthermore, if you die first and leave part or all of your estate to your spouse, it is possible for their estate to benefit from your unused tax allowance, with up to £650,000 passing tax free to the beneficiaries of their estate (e.g. your children). Co-habiting couples do not have these benefits.
It is important to have a will that adequately reflects your current circumstances and wishes. If you need any assistance with estate planning or dealing with disputes that have arisen, please contact the author, Alex Rogers, senior associate by calling +44 (0)1392 685268 or email email@example.com