Page 44 - Phonebox July 2013

There is a great deal of misunderstanding when it comes to the legal position of an unmarried couple. This covers many areas including intestacy, child custody and Inheritance Tax (IHT)*. Whilst this can not possibly be covered in a short article such as this, perhaps the most salient point is that without some form of legal documentation in place, any surviving partner is unlikely to be in a good position.
As far as intestacy is concerned, if you do not have a Will in place then you do not have a right to anything in your deceased partner’s estate. If they have children, it will go to them. If not, it will be shared between parents, siblings, aunts and uncles etc. If they have no close relatives, it can end up going to the Government. The short answer to this problem is write a Will.
Custody of children has improved in recent years, as from 1st December 2003, if you are named as the father on the Birth Certi cate you will have parental responsibility should your partner die. However, for children registered before this date, even as the father you may not have parental responsibility. However, you are able to put in place a Parental Responsibility Agreement with the mother to avoid this problem.
Whilst having a Will in place will ensure the estate of the deceased partner will go where it was intended, it does not deal with potential IHT problems. A lot of people overlook this as they think they will be unaffected due to the size of their estate. For married couples this is not an issue on rst death, as anything left between a
married couple (or those in a Civil Partnership) is exempt from IHT.
It is, however, easy to see an estate hit the point where IHT will be due (£325,000). Half the value of the house will usually be included and, in some cases, even more if the level of Life Assurance in place to cover the mortgage is higher than the outstanding loan at the time of death. In addition to this, the value of other Life Assurance policies may result in an estate value in excess of £325,000, leading to IHT being due. Assuming there is a Will in place, the remaining estate will then be in the name of the surviving partner. Their estate could then be considerable, meaning a much larger IHT bill in the future.
One possible way of avoiding this scenario is the use of Trusts for the Life Assurance. This will mean the proceeds will be available without the need for probate and, crucially, will not form part of the deceased partner’s estate.
If you would like to discuss or review your current nancial arrangements or your general retirement planning, then please call us. Remember, initial meetings are free and we are happy to come to see you in the comfort of your own home. See our advert below.
This article does not constitute advice and should not be taken as a recommendation to undertake any course of action mentioned without consulting a relevant professional.
*These 3 areas are not regulated by the Financial Conduct Authority
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