Reply With QuoteIf you marry and the deeds stay in her name and she passes away leaving the house to you then there is no IHT.
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For any knowledgeable or legal people that frequent this site.
Myself and my partner, ( not married or in a civil partnership), have been trying to sort our wills and financial situation out, ( we’re not getting any younger).
We’ve made wills leaving everything to each other should the worst happen, but, now here’s the problem, the house we live in is in my partners name only and is worth in the region of £850K.
If she passes then I’m left with an almighty big inheritance tax bill, as we see it.
Now, if we were to marry, or enter into a civil partnership, would that change things, even though my name is not on the deeds.
Of course we will consult a solicitor if need be, but I thought I’d ask here first.
If you marry and the deeds stay in her name and she passes away leaving the house to you then there is no IHT.
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Have a look here to start with but there's lots of useful information on the internet:
https://www.gov.uk/inheritance-tax
https://www.litrg.org.uk/tax-guides/...nheritance-tax
Unless enlightened by the many better informed minds on this forum than mine, I'd set a date!
No IHT between spouses. Get married.
Agreed, no IHT either way when the first spouse passes, though IHT will probably arise when the second passes given the value of the house alone is already close to the £1m threshold.Originally Posted by dandanthewatchman
Grateful already for replies, and yes, marriage or civil partnership has been discussed although we are both happy as we are.
Isn’t it a shame that in the world we live in today there is no allowance for co habitating partners.
On the question of deeds, does it matter if my name is not on them and we were married/civil partners.
Aye it’s an odd world but is what it is … I think many marriages happen for IHT reasons late in life.
I don’t think the names on the deeds matters as assets can pass between spouses free of IHT.
Given the likely size of your estate I’d see a solicitor.
Can we all come to Las Vegas with you? TZ wedding, yeehaaa!!
That’s why the civil partnership option was created, it bestows the same financial benefits of marriage without being married. It’s is the allowance for cohabiting partners.
As has been mentioned before, it doesn’t matter that you are not on the deeds for IHT purposes but she would still own the property and could leave it to whomever she pleases, you still have no automatic rights to it (as far as I’m aware).
Threshold is £650k.
Plus the residential nil rate band
Well yes and no. Extra 175k for owning a home under the main residence nil rate band, so for most couples it’s now £1 million. Gets eroded if the estate goes over £2 million. As the OP isn’t on the property I’m guessing wouldn’t be applicable for him, but maybe for partner, depending on overall assets.
OP needs to get this addressed really as in this scenario paying IHT can be avoided. Are their children/pensions/savings/investments/life insurance etc etc. Lots of things can be in trust, out and out of the estate. Take some advice, might save a lot of money.
This will only apply if OP is on the Deeds and the house passes to children or direct descendants.
On first death it can all go to the to the other half, on second death it can then pass to children with up to £1m free of IHT, as you can currently carry over any unused relief from the first person passing.
Although my earlier reply was definitely in favour of marriage or civil partnership, not everyone takes a solely financial view of such matters. I have two friends who have lived together for 45 years and they have no intention of getting married or entering a civil partnership, despite the obvious benefits. They share a house but otherwise have remained financially independent. They haven't even nominated each other to receive their (civil service) pension benefits if the other dies (they are in their late 60s). When one does die, the survivor will no doubt take a big financial hit (they live in London so I imagine their house is a seven figure affair). But despite their lifelong commitment to each other, they have chosen to remain financially independent and (so far) have remained committed to the status quo. I don't really understand their choice but for some people financial considerations are less important than for others.
Why do you think that applies?
In answer to few points raised.
No children, both of us have pensions, I’m drawing mine and my partner invested hers to draw when she wants.
We also have a few rentals in joint names.
We had no intentions of getting married etc but after talking about things and totting up figures etc we thought we’d better look into it.
We’ve both worked very hard and invested heavily for our future, the last thing we want is to lose a big chunk to the tax man.
Is the property unencumbered? If so, have you though about putting the property into trust?
Mortgage/loan free, yes we have mentioned trusts but need to dig into that to see any pitfalls etc
As explained above by Devonian and nick67, though a moot point since the OPs subsequent post disclosing the lack of direct descendants.
Last edited by Halitosis; 28th July 2023 at 11:00.
If you’ve got a few Bob, as you say you have, why not go to a solicitor, it’s not expensive, and you’ll get far better advice than from blokes on the internet
We absolutely intend to, I just wanted to be a bit more informed before doing so, and of course ask the right questions.
Always a wealth of knowledge here that is much appreciated
Having just dealt with a close relations Will who was not married but lived with their partner for more than 45 years and survived that partner by 8 years, the solictor dealing with the estate informed us that when the partner died 9 years ago the jointly owned property in both names was valued by estate agents at £590k and as they had mirror wills allowing the survivor to stay in the property or move away if they so wished that their 50% share of the £590k was put in Trust for his 3 children until the 2nd partner passed away..
When the 2nd partner died last year who had 2 children the property was valued at £925k and the 50% share in the trust fund being £295k is added to the 50% share of the survivors property value £462k plus any other personal assets for purposes of inheritance tax. and that the proceeds of the sale of the property at £925k would be split 50/50 between their spouses. I beleive there is an allowance of £175K if the property is being left to their children.
In short get along to a solicitor and get all aspects and wishes of whatever route you choose fully explained.
Quite, why make assumptions and maybe extrapolate your circumstances to the OP’s?
I did extrapolate, though I think I did so based on assumptions around the OP's query rather than my own circumstances. My initial comment "Agreed, no IHT either way when the first spouse passes, though IHT will probably arise when the second passes given the value of the house alone is already close to the £1m threshold." was correct up until that assumption.
Perhaps when I read a question about IHT I automatically jump to an assumption that there are descendants. Apologies to the OP and yourself.
No need to apologise, I should have explained things better in my original post.
Appointment made with solicitor next week, I'll let you know the outcome.
Good luck - if the appointment's near a jeweller, you'll be able to buy the ring on the way home ;)
I don't want to put you off your appointment, but being a tax matter, wouldn't an accountant be more appropriate?
Oh shite! Hadn’t thought about that, lol.
I think it’s a bit of both, we have to check our wills are in order if things were to change.
We can always go down the account route after that.👍
Solicitors are usually up to date with IHT issues as they are drafting wills. This is not normally an area of expertise for a generalist accountant. An alternative would be a Tax Practitioner who specialises in IHT matters
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As an update, basically get married is what the solicitor suggested, so good advice from the forum again.
This thread has been a real eye-opener.
I had absolutely no idea the basic IHT threshold was so low relative to inflated property values.
Whilst I appreciate there are ways to raise the threshold for direct descendants, it still does feel a bit too low for 'Old Uncle Bob', who lives on his own without kids and wants to leave his £500k bungalow to his niece and nephew when he dies.
^^^Bob's your uncle?
It's a contentious tax in many ways but often because it is largely avoided by the wealthiest at whom it is targeted as they can afford prudent planning advice, yet catches the much less wealthy.
Loving your work!
It certainly feels like it.... I will say no more as this is the G&D.
In my experience the niece and nephew are spoilt brats who should look at what they are receiving for free not what the estate pays in IHT. If there was an aunty Brenda married to bob he would get her IHT allowance as well so no IHT payable in your example. If he had never been married then the IHT would be approx 70k Leaving nephew and niece 215k each by fortune of birth.
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It used to be described as a “voluntary tax”. Let’s just say that while that might have been the case up to 15 or 20 years ago, it’s very much less the case now, thanks to current anti-avoidance legislation.
Did you sort out lasting power of attorney for you both too?
You can do it yourself but as we’ve recently had our wills sorted and know we won’t get around to doing it ourselves we are getting the will writer to do it. It’s a big one and if you are married can be more important than a will.
We have also had a property trust should one of us end up in a care home.
Getting that sorted as well 👍
That is quite a jump.
All hypothetical but in my example, it was Old Uncle Bob who was a rather unhappy about knowing his estate would be reduced by £70k due to a heavy-handed tax burden.
Poor fella, has scrimped and saved his entire life to clear his tiny mortgage while working 12hours a day, 6 days per week as a farm worker. He lives a simple life, eats value 'own-brand' pound-store biscuits and only has a tiny coal fire in one room for heating all so that his siblings children, who he thinks the world of, will have a better life that he did.
He now wonders if he should have married Edna, the barmaid from the Coach and Horses after all. She was the only one he ever had eyes for......
Anything the nieces/nephews receive will be better than a poke in the eye with a sharp stick, so they are winners however you look at it.
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