Q: My partner and I live together but cannot marry because her husband has been in a coma for several years following a brain injury and, understandably, she won’t divorce him. We are totally committed to one another and own our home jointly, but I am aware that if I die first, she will not qualify for the IHT exemptions she would benefit from had we married. What steps can I take to protect her?
A: The first and most important step, if you haven’t already taken it, is to both make professionally drafted Wills. Seeking professional advice will be crucial to achieving the outcome you want as without marriage or civil partnership your situation is complex and neither of you can benefit from IHT exemptions, the spouse exemption or the transfer of unused tax-free allowances. Worse still, without a Will, if your partner died assets in her sole name valued up to £322,000 would automatically go to her husband under the rules of intestacy law. A properly drafted Will allows you to leave assets specifically to each other.
Secondly, you should check that you own your property as Joint Tenants (as opposed to Tenants in Common). This will ensure the survivor becomes sole owner of the property when the other one dies. Additionally, you can provide your partner with monies potentially outside your taxable estate, and free of IHT, by taking out a life assurance policy written in trust, which would go direct to her. If you have a pension fund you can nominate your partner as beneficiary though an “Expression of Wishes” sent to your pension provider. If you have spare cash, you can use your annual Gift Allowance which currently allows you to gift £3k max per year tax-free. Depending on the feasibility of your age and assets, another option would be to make a lifetime gift to your partner, but you must survive the gift by seven years for it to be free of tax liabilities and you must not retain an interest in that asset.
This question has been answered by Victoria Wilson, a Partner with GHP Legal. If you would like to speak to someone about this or any other legal matter, please visit our website www.ghplegal.com and use the contact us form, or call us on: Wrexham 01978 291456, Llangollen 01978 860313, Oswestry 01691 659194
