Published On: Fri, May 27th, 2022

Inheritance tax shock: THOUSANDS at risk of unexpected bill – ‘May have to sell home’ | Personal Finance | Finance

More over 70s are choosing to cohabitate with their partners rather than enter an actual marriage or civil partnership. While this may seem to have all the romance without any of the paperwork of a traditional relationship at that age, it could have dire consequences if one of them passes away.

Since 2002, the number of people over the age of 70 cohabitating with their partner rose by an incredible 288 percent. 

In 2002 in England and Wales, 45,066 people over the age of 70 were cohabitating with their partner without being married or in a civil partnership. 

In 2020, this figure was an astounding 175,028. 

Undeniably this proves a change in expectations of what a relationship may look like. However, many couples may not fully understand what they are risking.

READ MORE: Santander is offering a 2.5 percent interest rate and you only need £1 to start saving

Marriage in general is on the decline, with other lifestyles like cohabitating slowly making their way up the popularity scale. 

However, in a somewhat modern society certain rules and regulations now find themselves lacking in this regard, with Britons suffering the consequences if they aren’t careful. 

Ellie Sawkins, investment analyst at Wealth Club commented:  “People over the age of 65 are getting married and divorced in greater numbers than ever before, creating an entire generation of silver splicers and splitters. But this growing demographic may unwittingly be putting their partners homes at risk.

“Unmarried couples’ homes are subject to inheritance tax when one partner dies, leaving their share in a joint home to the surviving partner. This tax liability would be due within six months, and so for many might mean that as well as dealing with the loss of a loved one, they are forced to sell their home, and quickly. A quick sale will almost inevitably mean having to reduce the price of the property, which is a double whammy for those already grieving the loss of a loved one. Cohabitants need to put real thought into how they address this problem.

“While marriage and civil partnerships aren’t right for everyone, they can offer significant inheritance tax advantages. There are dangers too though. Marrying without a will could result in your children perhaps from a previous relationship missing out on inheritance you had intended to leave them, since your assets will pass to your new partner in the first instance, and potentially then on to their children in the event of their death. It’s important that you clearly set out your intentions in a will.”


There are many ways to avoid having a hefty inheritance tax bill, one of which is using one’s spouse or civil partner as the sole heir. 

However, without entering an actual marriage or civil partnership this method, and others like it, will be useless. 

Ben Alcock, independent financial adviser at Continuum, said: “Although there may be social and other obligations, without a formal contract of marriage or civil partnership, there are few automatic rights over money or even things like a shared home.

“If one partner owns a property in their name alone, the surviving partner has no clear right of ownership or habitation if the owner dies.”

While it certainly seems outdated and unreasonable, under the eyes of inheritance law, a blood relative who has not spoken to the deceased for decades would have more rights over the estate than a cohabiting partner. 

Even the taxman could claim more legal rights to the estate than a much loved partner. 

However, Mr Alcock noted this is not an ultimatum to force couples into marriage or a civil partnership and there are other things one can do. 

For example, arranging for a home to be in common ownership when it is first bought can ensure that neither of the pair go homeless in the worst case scenario. 

However, this will not wipe away the inheritance tax burden. 

Mr Alcock continued: “When one partner of an unmarried couple dies, their estate becomes liable for IHT on any assets above the IHT allowance. Worse, the IHT will be payable before the assets can be transferred, potentially leaving the estate with a hefty tax bill to pay. The surviving partner may inherit less than they may have expected. They may have to sell the home they shared to pay it.” 

Another way to avoid this inconspicuous issue is through proper succession planning.

Mr Alcock explained: “Succession planning is a complex field and requires in depth knowledge of tax and many other areas where rules and regulations have mounted up. Independent financial advice firms such as Continuum can provide the expertise you need and work with other professionals, such as your solicitor and accountant, to deliver the outcome you and those you leave behind really want.”

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