As a heterosexual couple lost their legal fight to have a civil partnership instead of a marriage many people are now left confused on what is the legal status of being married, in a civil partnership or simply living together.
Carol Cummins (pictured), consultant at national law firm Clarke Willmott LLP, says actually there are no financial and inheritance differences between being married or in a civil partnership – but those living together could lose out.
She said: “The rules for marriage and civil partnership status now are pretty much the same. The strongest one being the ability to leave assets to your partner on death without any inheritance tax being payable, which is why Radio 4 Presenter Steve Hewlett married his partner Rachel earlier this month when he knew he had a terminal illness.
“The only advantage for those living together is that those who are married or in a civil partnership can only claim one capital gains tax main residence exemption between them while an unmarried couple could claim one each which will be relevant if the couple own more than one property which they occupy.”
The other financial and inheritance tax benefits of being in a marriage or civil partnership are:
- The ability to claim your partner’s unused nil rate band and residence nil rate band (two Inheritance Tax reliefs which together can save £200,000 in tax)
- The ability to make lifetime gifts to your partner without any inheritance tax or capital gains tax being payable allowing the assets to be arranged in the most tax efficient way.
- An automatic entitlement to receive part or all of your partner’s estate under the intestacy rules on their death without making a Will.
- The ability to claim against your partner’s estate if they have not made reasonable financial provision for you in their Will without having to show a relationship that has lasted for two years or financial dependence (which is the case with cohabitants.)
- The ability generally to be considered by any private pension scheme to which your partner contributed for a survivor’s pension without the necessity to show any kind of financial dependence/interdependence as is apparently often the case with cohabitants.
Carol Cummins said: “In reality it does not matter financially or legally whether someone is married or in a civil partnership, but it is clear from the Court of Appeal case that many people feel that the two statuses are different and that comes down to the vows and how the ceremonies are regarded.”