You won’t find this printed on a Valentine’s card, but everlasting love can be linked to financial planning. During their lifetimes, many couples share their assets, property and money between them, and when one of them dies, they want the surviving partner to be well provided for. That’s relatively straightforward for married couples, but not so clear cut if you are co-habiting, even if you’ve been together for decades.
Earlier this month a judge in the UK’s Supreme Court ruled in favour of Denise Brewster, who had filed a “serious discrimination” suit after being denied a claim to her long-term partner Lenny McMullan’s pension. She argued that, although he’d failed to name her as his beneficiary and they weren’t married, as Mr McMullan’s partner of 10 years, she should receive the same treatment as if they were wed. She won the case, but this landmark case proves that it’s worth getting your wishes in writing now, rather than letting your partner fight in the courts after your death.
Pensions are a great place to start because providers offer you the chance to name the person you want as the beneficiary. If Mr McMullan had completed his form and named Ms Brewster, she’d have had an automatic right to receive the pension payments. If you hold pensions with more than one provider, make sure you contact each one to name your beneficiary.
It’s vital to get a will in place so that you are clear about who is getting what from your estate. Sadly, unmarried couples do not automatically have a right to each other’s assets if one dies without making their will. This can get even more complicated for families that include children from previous relationships, and the fallout can be incredibly traumatic for all concerned. In addition to having a will, more unmarried couples are now seeking ‘Co-habitation Agreements’ to further protect them and their loved ones.
The transfer of assets between spouses does not incur a tax liability (however, this is not the same for unmarried couples). If you would like to utilise both capital gain tax allowances be sure to buy any major assests in joint names so that each partner can make use of their individual allowance. On offer is a threshold of £11,100 (2016-2017) for each spouse or civil partner, so up to £22,200 of any gain can be tax-free in 2016-17, but the transfer to your spouse or partner must be a genuine outright gift.
In 2015, the Government also created the tax break which means that married couples or those in civil partnerships can transfer their basic rate thresholds. That means if one half of the couple earns less than the £11,000 (£11,500 from 6th April 2017) threshold, they can transfer up to £1,100 to their spouse. This is a saving of up to £220 a year and can be backdated for up to four years – although it’s only calculated from the 2015 start date.
The rules favour married couples, and our legal system largely ignores the needs and obligations of the adult members of separated or unmarried families. If you’d like some reassurance and advice on how best to protect your loved ones now and beyond your lifetime, give Moyes Investments a call on 01638 429975 or email [email protected]