As it becomes more and more common for couples to live together without marrying or entering into a civil partnership, it becomes more and more important to understand what happens when an unmarried partner dies.

The government is also expecting to provide more rights for cohabiting couples.

“But we’re common-law married!”

Common law marriage does not exist.

The current law does not give special status to couples who live together but are not married or in a civil partnership. If you are cohabiting, the law essentially treats this as if you had bought a house with a stranger.

How to protect your money when buying a house together

Where unmarried people buy a house together, they may well each contribute different amounts to the deposit, and may also pay the mortgage unequally. These unequal contributions can be protected in a declaration of trust, which sets out who owns what share of a property. Without anything in writing, the presumption is that the property is owned equally.

If a married couple has a declaration of trust and then divorces, the court may deviate from it as part of the financial orders. That is not the case with unmarried couples – at least currently.

Inheritance tax

Gifts to spouses and civil partners are exempt from inheritance tax, whether they are made during lifetime or on death.

A gift to an unmarried partner does have a similar exemption and will instead use up the deceased’s Nil Rate Band. If the deceased is leaving their share of their house to their unmarried partner, the Residence Nil Rate Band is not available either, as the house is not left to a direct descendant. That means that if the estate is worth more than £325,000, there will be inheritance tax to pay. Depending on the size and composition of the estate, that could mean the house has to be sold to pay the tax, thus depriving the partner of their own home.

By contrast, a married couple leaving everything to each other on first death would pay no inheritance tax, and if they left everything (including the family home) to their children on second death, the threshold would be £1 million.

Why you need a Will

Currently, unmarried partners do not feature in the intestacy rules. This means that they would only inherit assets held as joint tenants, such as joint bank accounts and some properties. Assets held in the deceased’s sole name or as tenants in common would instead pass to their nearest blood relatives. The surviving partner’s only real option is to claim under the Inheritance (Provision for Family and Dependants) Act 1975 for reasonable financial provision. However, they would have to have lived together for at least two years as if they were a married couple, and any claim would be limited to what they need for their maintenance (i.e. day to day living costs).

It is therefore particularly important for unmarried couples to make Wills where they have a declaration of trust for their property, as they have to own it as tenants in common.

In 2021 there were plans in the House of Lords to include unmarried partners in the intestacy rules, provided that they had been living together for three years as a married couple or had a child together. Without government backing, though, these proposals never went anywhere. Now, though, that might be about to change.

Government plans

The new government pledged in its manifesto to strengthen the rights and protections of women in cohabiting relationships. It will therefore be consulting on reforming cohabitation law. It is still very early days so details are sketchy, but could involve an opt-out scheme to protect cohabitees who are financially vulnerable. That said, any scheme that could resemble financial orders on divorce will have to tread a tightrope. Many couples decide not to get married because they do not want to risk losing their own assets on a split-up.

A recent poll by the Will-writing scheme, Will Aid, has revealed that 65% of people think the intestacy rules should include unmarried partners. Around three quarters of unmarried partners were unaware of what would happen on death if they did not have Wills.

Similarly, any change to the intestacy rules could be controversial. Many will believe that unmarried partners by definition have chosen not to leave their estates automatically to each other. If they say they want to ensure that the survivor gets the estate, they should either make Wills or get married.

How we can help

Whatever the government decides to do, there is only one way to guarantee that your assets will go to the people you want, and that is to make a Will.

For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk.

Your Will is the most important document you will ever put your name to. That means that you should ensure that you keep it up-to-date and treat it as a living document.

This article considers some of the main events that should trigger you to review your Will.

Under the general law, if you marry or enter into a civil partnership, your Will is automatically revoked unless it states otherwise.

As a result, many unmarried partners will have a clause in their Wills confirming that they are made in anticipation of marriage and so will not be revoked if they go on to marry each other. Even if your Wills have such a clause, it is still sensible to review your Wills after getting married to ensure that they are still fit for purpose. For starters, anything left to a spouse or civil partner is exempt from inheritance tax, but this is not the case for transfers between unmarried partners.

By contrast, divorce does not automatically revoke a Will in the same way that marriage does. Instead, the Will is still valid, but is treated as if the now ex-spouse had died before you. Such are the quirks of legislation that is almost 200 years old!

This means that unless the Will states otherwise, any appointment of them as Executor or Trustee will fail, as will any gift left to them. If, therefore, you are still on good terms with your ex-spouse and you still want them to benefit from your Estate, you may need to make a new Will stating that any mention of them is not to be affected by your divorce.

The birth of a new child is a prime time to review your Will, and here we discuss some points to bear in mind when you have children under 18.

Some Wills mention each child by name. In that case, the new child will not inherit anything and you would need to make a new Will to include them.

Of course, your children may well go on to have children of their own. There are many ways to include grandchildren in your Will, which could include:

• Leaving a legacy (i.e. a fixed sum of money) to each grandchild
• Leaving a fraction of the Estate between all your grandchildren
• If one of your children had died before you, leaving their share of your Estate to their children (i.e. your grandchildren) instead
• Creating a discretionary Trust to allow your executors to let your grandchildren have part of your Estate as and when they see fit

We would be very happy to discuss these options with you.

If you have remarried but still want to protect your children from previous marriages, you can include a Trust in your Will. This can ensure that your new spouse can benefit from your Estate while they are alive, but they do not own it outright. On their death it will go down to your children.

Many types of business asset benefit from Business Property Relief, which can create a substantial inheritance tax saving. Agricultural assets can similarly benefit from Agricultural Property Relief.

If you start a business, you should consider the implications for both inheritance tax and capital gains tax. This is very likely to involve updating your Will, to ensure that your business (a) is left to people who want to continue running it after your death and (b) is left in the most tax-efficient way. If you are not careful, you could end up wasting the relief, and in the worst case scenario this can actually end up creating more inheritance tax!

The same is true if you sell your business, as the reliefs will no longer be available. You should consider what the tax position will be after you sell, and take the opportunity to carry out some Estate planning. This could involve changing your Will to remove any clause dealing with your business or agricultural property, as well as making gifts during your lifetime in order to reduce the size of your estate.

You may want to ensure that all your children receive an equal amount from you, but if you have already been making lifetime gifts to them, some of them might have already received more than others from you.

You could therefore simply leave more to the others in your Will. However, this will be problematic if you subsequently make further gifts, and then all the amounts will be out of kilter. To prevent this, you can instead include a clause to take all lifetime gifts over a certain amount into account when calculating how much each of your children receives from your Will. This also means that you would not have to keep making new Wills each time you make a gift.

Since you made your last Will, you may have moved to another country but kept some assets in England and Wales. Some types of asset will pass under English succession law, even if you are no longer domiciled there. In that case, you should ensure that you still have an English Will that deals with the assets there, even if you also have a Will dealing with your foreign assets.

UK nationals who own property in many EU jurisdictions can make an English Will that covers worldwide assets and includes a choice for the foreign assets to pass under English succession law.

For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk.

The law on Capital Gains Tax (CGT) during Estate administration is often misunderstood. In many ways, the position between sales by living persons and by executors are similar but are often subtly but importantly different. They can easily catch you out!

Many non-professional Executors believe that CGT is based on the price at which the deceased bought an asset. This can make people concerned when the deceased bought their house many decades ago and it has increased in value several times over.

However, there is a free uplift of CGT on death to the date of death value. This means that when the Executors sell an asset, they only need to look at the difference in value between the date of death and the date of sale.

When someone sells their main residence during their lifetime, they can usually claim Principal Private Residence Relief (PPRR). This means that any increase in value since the purchase is not taken into account when they calculate the gains on the rest of their asset sales from that tax year.

The position on death is different. PPRR is only available for Executors when the house was the main residence of at least one individual immediately before and immediately after the death. The individual(s) must also be entitled to at least 75% of the sale proceeds, whether from the Will or otherwise. In practice, therefore, PPRR will only be available on death when the deceased was living with someone else.

Where PPRR is not available, Executors must submit a provisional return of the estimated gain and pay any tax due within 60 days of completion.

As with sales during lifetime, the Estate can deduct the incidental expenses incurred in selling an asset, such as mortgage redemption, estate agent’s fees, broker fees and conveyancing fees. This ensures that it is only the net gain that is taxable.

In addition, if you have solicitors acting in the Estate administration, you can deduct a portion of their fees. These are calculated in different ways depending on the value of the asset.

The annual exempt amount for estates is the same as for living individuals, and double the amount for most types of trusts. As of tax year 2024/25 it is £3,000, which is much lower than in previous tax years.

The exemption is only available in the tax year containing the date of death and the two immediately thereafter. If there are assets that have still not been sold after that, the exemption is lost!

This can be a powerful way to wash out a large capital gain in Estates which have multiple beneficiaries.

The basic position is that the Estate only has one CGT annual exemption. This amount is much lower than it has been in previous tax years. If assets have sold for much more than this, there could be a substantial tax bill.

To alleviate this, the Executors can choose to “appropriate” the asset before it is sold: this means that instead of being sold by the Estate, it is treated as if it were sold by the beneficiaries. As a result, all the beneficiaries can use their own CGT allowances and the Estate can still use its own one. Therefore, in an Estate with three residuary beneficiaries, the gain can be split across four CGT allowances, i.e. one for each beneficiary plus one for the estate!

Depending on the circumstances, the executors may need to file a tax return. This includes Estates in which any of the following conditions apply:

• The total sale proceeds are more than 4 times the annual allowance
• The will contains a trust
• The total income tax and CGT liability for the administration period is over £10,000
• The probate value of the Estate is over £2.5 million
• The Executors sold assets in any one tax year for more than £500,000 (or £250,000 where the date of death was before 6 April 2016)

If none of these applies, the Executors may be able to make an informal payment to HMRC for the whole administration period.

Capital gains tax for Executors can be a minefield with all of its quirks and differences compared to how living individuals are treated. It is therefore essential for Executors to take proper advice on the CGT implications of a proposed sale, especially where the value has increased substantially since the date of death.

For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk.

If you have children under the age of 18 years, your Will needs to set out what will happen to them if you die before they turn 18 as well as who is responsible for looking after anything you leave them.

For our purposes there are three roles that matter: executors, trustees and guardians. These can all be filled by the same people but the responsibilities of each are different.

Your executors are responsible for the financial aspects of your estate: applying for probate, closing down bank accounts, paying any liabilities and distributing the rest to the beneficiaries in accordance with your Will. Your executors will also be the trustees of any Trust included in your Will, which we expand on below.

Your guardians are responsible for looking after your children day to day.

In the vast majority of cases, a guardian can only be appointed by a person with parental responsibility or by someone who themselves has already been appointed as a guardian.

If a child’s parents are married or in a civil partnership when the child is born, both parents automatically have parental responsibility. If not, the mother still does automatically, but the father would only have it in certain circumstances, e.g. if he is named on the birth certificate or he goes on to marry the mother.

We would strongly suggest including a clause in your Will in which you appoint guardians for your minor children. This appointment would take effect when both parents have died and would last until the child’s 18^th birthday.

For practical purposes, it is best if both parents appoint the same guardians in their respective Wills.

The position is more complicated where there are stepparents; in that case we would highly recommend discussing this with us at a meeting.

As mentioned above, when a minor inherits someone’s Estate, it must be held on Trust for them until they are at least 18.

For a Trust to work properly, there need to be at least 2 trustees so this is the minimum number you should appoint. It is possible to appoint just one, but then that person would need to appoint a second trustee to act alongside them. This may not be someone you approve of, so if you want to retain some control you should appoint at least two executors/trustees.

You may not want your children to become absolutely entitled to their share of your Estate the moment they turn 18. Other common ages you can specify are 21 and 25, because there are often inheritance tax benefits to Trusts where the children are entitled to their share before they turn 25. Ultimately, though, it is entirely up to you. Whichever age you choose, your trustees will still be able to let them have some of the money before then, if e.g. they need it for school fees or private medical care.

That said, there are several other types of Trusts available, and we would be more than happy to discuss these with you to find the one that best suits your aims.

For further advice and assistance please contact our Wills, Trusts and Probate team on 01604 828282 / 01908 660966 or email info@franklins-sols.co.uk.