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I Take You To Be My Lawfully Wedded…

Reasons to choose Wilson Browne

“For richer, for poorer, in sickness and health, until death do us part.”

When citing these popular wedding vows the last thing the happy couple is likely to be considering is their Will and their new tax position. However, marriage can have a serious impact on individuals who already have Wills in place. Did you know that marriage automatically REVOKES a Will, unless you have included a clause which states your intention to marry your beloved? Marriage also has an impact on the rules surrounding the Inheritance Tax and Capital Gains Tax.

Inheritance Tax (IHT)

Sadly, for cohabiting couples the tax system is wholly unsympathetic. Married couples and civil partners benefit enormously from an unlimited IHT exemption on transfers between them, whether on lifetime gifts or on death. The only exception is where the couple have a different residence status and the transfer is to the non-UK domiciled spouse or civil partner. In that case, the exemption is limited to £325,000.

Where the unlimited IHT exemption applies and the main asset is the family home, it means there’s no need for the survivor to sell it to pay the tax. That’s the main risk for unmarried cohabiting couples. However, a suitable life insurance policy that pays out a sum equivalent to the likely tax on the second death can offer a cost-effective solution, particularly if the couple is in good health.

Capital Gains Tax (CGT)

There are also significant CGT benefits for married couples and civil partners who make lifetime gifts to each other. The gift avoids an immediate CGT charge and instead the recipient takes over the spouse’s original purchase cost. Transfers on death, however, are treated the same for all cohabiting couples whether or not they are married or in a civil partnership. The deceased’s historic gain is simply wiped out and the recipient can then sell the asset without a CGT charge.

One area where unmarried couples have a better tax treatment is CGT main residence relief. If they each own their own home (one of which may very well simply be a holiday home), they can continue to claim the exemption on both whereas married couples and civil partners can only claim one relief between them.

Second marriages

In this day and age it is very common to come across second marriage families; to include step children. There are mechanisms in place to make sure that your share of your Estate (whether that be your half share of the property) is protected for your children whilst your spouse can still benefit from a life interest.

Weddings are all about nice things, THE DRESS, presents and, of course, the honeymoon, but don’t overlook the more serious things such as your Will. The Wills and Trusts team can go through all these matters with you at an initial meeting and advise you fully on the preparation of your Wills.

Stacy Ludlam


Stacy Ludlam

Senior Associate

Stacy is a Fellow member of the Institute of Chartered Legal Executives (FCILEx) and advises clients on Wills, probate, trusts, inheritance tax, lasting powers of attorney and more.