Tax Advantages of Civil Partnership and Marriage – 10 FAQs

Tax Advantages of Civil Partnership and Marriage1. Tax advantages of civil partnership and marriage

Did you know there are tax advantages to being in a civil partnership or marriage? This blog looks at the savings you can make on income tax, capital gains tax and inheritance tax. 

2. “Common Law Marriage” does not exist

If you’re living together you don’t have the same rights or tax advantages as if you’re in a civil partnership or marriage. The law is changing in 2019 to extend civil partnerships to mixed sex couples and they will benefit from the same tax breaks as same sex civil partners and married couples.

3. Tax advantages of civil partnership and marriage

  • You can transfer some of your unused income tax personal allowance to your civil partner or spouse
  • Gifts to each other are free of capital gains tax (CGT)
  • Gifts to each other are free of inheritance tax (IHT)
  • You can carry over your civil partner’s or spouse’s unused IHT tax free allowance

4. Income tax

Transfer £1,190 of your personal allowance to your civil partner or spouse if they earn more than you and save £238 tax (tax year 2018/2019). See this guide to how to apply, including backdating.

5. CGT

Civil partners and married couples can gift their assets to each other free of CGT. A gift of assets to the civil partner/spouse who pays a lower rate of tax will mean they pay less tax on income from the asset, and less CGT if they dispose of the asset. Or transfer assets into joint names and you can both make use of your tax free exemption which in 2018/2019 is £11700.

6. IHT

The threshold is £325,000, the standard tax rate is 40 percent. Leave your estate to your civil partner/spouse tax free and they can carry over your unused IHT tax free allowance and save IHT on £650,000 of their estate.

7. IHT on home left to the children (inc adopted, foster or stepchildren) or grandchildren

The threshold rises to £450,000 and a further £25,000 will be added each year until 2020. This means the combined carry over is £900,000 and increases each year until it reaches £1m in 2020. But if your estate is worth more than £2m it’s less beneficial.

8. Are there any CGT downsides to civil partnership or marriage?

Yes there can be if you own a property each. In the case of cohabitees each property can be a principle residence and so exempt. But if you enter into a civil partnership or get married only one property counts as a main residence. There are strict time limits for avoiding CGT on the other property so make sure you don’t miss out.

9. Do I need a Will?

An expert solicitor can help you reduce IHT or avoid it altogether. See my recent blog Do I Need A Will? Here’s One Very Good Reason.

10. Tax advantages of civil partnership and marriage

Contact expert Wills solicitor, Karen Layland, on 01202 798199 or by email karenlayland@just-family-law.com  for free advice on the topics raised in “Tax Advantages of Civil Partnership and Marriage”. In this 20 minute session we will review your situation and how you can achieve your objectives.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families. Visit our website just-family-law.com The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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“Common Law Property Rights?” 6 Things You Must Include In A Cohabitation Agreement

 

Ever wondered about Common Law Property Rights?

If you are moving in together you will be busy unpacking boxes and finding a home for everything. Or maybe you’ve been living together for a while and everything’s rosy.

But did you know there’s no such thing as common law marriage? And you don’t have the same rights as a married couple? This may come as a shock to you but don’t worry, there’s something you can do about it. If you’re still not convinced, see my blog 6 reasons why you need a cohabitation agreement

If you want an equal and sharing relationship with your partner, but you also want to protect your property from a claim should you split up, consult an expert family law solicitor.

Here are six things you will need to think about for your Cohabitation Agreement.

1. Property you owned before you moved in together

Couples often agree it will remain separate. They can also agree their partner can’t make a claim over it.

For example, you own your own home and your partner moves in. What if your partner makes payments on the mortgage? Or does work on the property? This could give them a claim over it. If this is not what you want, you really do need to be explicit about it.

2. Property you acquire after you move in together

The question is, do you buy it as joint tenants or as tenants in common? What do these terms mean and how can you protect yourself? See my blog Shall I buy a house with my partner for a quick and clear explanation.

But if the property is in the sole name of one of you, you need to address the issues raised in paragraph 1 above.

3. Household expenses

What if you don’t own your home jointly? Or if one of you earns more than the other?

Maybe you will agree unequal contributions. Maybe your partner will agree to contribute to the mortgage and acknowledge this will give them no claim over the property.

4. Inheritance and Wills

Did you know unmarried couples don’t automatically inherit each other’s estates if they die?

Life assurance can be important for the survivor. But if you do want to leave your estates to each other make sure you both have a will and you keep it up to date. See my recent blog, Do I need a will? Here’s one very good reason.

5. Children

If you have children already, you can provide for co-parenting if you split.

You can think about where the children will live and who will pay child maintenance and how much – see my blog What are your child maintenance options. You might want to consider the ownership of your home. After all, the children will need a roof over their heads.

You can also agree payments to the parent with whom the children will live if their earning capacity is likely to be reduced as a result.

6. Independent Legal Advice

Both of you will need to take independent legal advice. This means you will have no doubt about what you are agreeing, and it will make your agreement binding. And if your relationship ends, the Court is more likely to take notice of your agreement and put it into effect.

But please remember a Cohabitation Agreement must be revisited as your relationship evolves:

  • If children arrive
  • If your financial situation changes radically
  • There could be health problems, inheritances and issues concerning aging and elder care.

Cohabitation Agreements

Contact Joanne Houston on 01962 217640 for free advice on cohabitation agreements. In this 20 minute session we will review your situation and how you can achieve your objectives.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions. We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families. Visit our website just-family-law.com The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

image Man and woman silhouettes by Fred Bchx on Wikimedia Commons

 

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6 Reasons Why You Need A Cohabitation Agreement

  1. Did you know there’s no such thing as Common Law marriage? In addition, did you know cohabitees don’t have the same rights as married couples? A Cohabitation Agreement can protect you and your property. It can also set out what will happen in the event of your separation, or death. The Court is likely to be guided by your Cohabitation Agreement if there’s a dispute.

A Cohabitation Agreement Can Protect You And Your Property 

  1. If your relationship ends you can literally find yourself out in the cold. This is because unless you are the owner, or joint owner, of your shared home you have no automatic legal right to it. You may have sunk a lot of money into its purchase. Or perhaps you have paid for improvements. But if your name is not on the title you could come away with nothing.
  1. In the Cohabitation Agreement you can agree how you own property. This may be in equal or unequal shares, or you may agree to keep your property separate.

A Cohabitation Agreement Can Protect You And Your Property  On Death

  1. What happens if your cohabitee dies and there’s no Will? Their estate is distributed under the intestacy rules. But these rules do not mention a surviving cohabitee. So in other words you could be left with nothing. But don’t worry, you can agree what will happen to your property after death in your Cohabitation Agreement. In addition, it’s vital to make Wills and regularly review them.
  1. Furthermore you need to make sure you know your entitlement to your partner’s pension. A surviving cohabitee might be entitled to benefits under a late partner’s pension scheme. But this is not guaranteed. You might need to agree to nominate each other in respect of death in service payments.

Regularly Review Your Cohabitation Agreement

  1. A Cohabitation Agreement can address many of these concerns, and more. It can also cover household bills, debts, businesses. But if there is a change in circumstances such as the arrival of children please make sure you review your Cohabitation Agreement with your solicitor.

Find out more about how Cohabitation Agreements can protect you and your property. Phone Joanne Houston on 01962 217640 for a free 20 minute consultation.

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JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

We offer collaborative law which is especially relevant in providing solutions tailored to your family’s needs. This includes same sex couples and their families.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. Therefore if any of the circumstances mentioned in this blog have application to you, seek expert legal advice.

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10 Reasons You Need A Prenuptial Agreement When Life Is Rosy

prenuptial agreement

1. Does a Prenuptial Agreement sound unromantic? Some say it proves you’re marrying for love and not for money.

2. A Prenuptial Agreement can be important for assets brought into the marriage, or if there are children of an earlier relationship.

3. Don’t be under any illusions about the significance of a Prenuptial Agreement. If every couple had one there’d be far fewer disputes about finances, and divorce solicitors would be left twiddling their thumbs.

4. If a Prenuptial Agreement is prepared with the assistance of an expert family solicitor it stands a good chance of being upheld by the court.

5. If you don’t have a Prenuptial Agreement and your marriage breaks down all the finances are up for grabs because the ownership of any asset, whether in sole or joint names, and whenever acquired, can be changed.

6. A Prenuptial Agreement can be particularly important if one of the couple is wealthy.

7. The longer you’re together the more likely it is your circumstances will change, for example you might start a very successful business. If your Prenuptial Agreement no longer suits your circumstances it can be revised.

8. Or if you don’t have a Prenuptial Agreement you can enter into a Post Nuptial Agreement. 

9. In fact it’s never too late. Even if your marriage has broken down and you’ve decided to divorce you can enter into a Separation Agreement. This can provide for you to live separately and divorce after two years, and can set out the arrangements for the children, the property and money.

10. And don’t forget if you want to enter into a Prenuptial or Post Nuptial or Separation Agreement, or if you have an existing agreement and would like to renegotiate it, collaborative law or mediation is available if you need help agreeing the fine details.

Phone me on 01962 217640 for a free 20 minute consultation on these important issues.

JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

Love Birds by Marco Verch on WikiMedia Commons

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Prenuptial Agreement – Relationship Insurance?

prenuptial agreementDon’t be under any illusions about the significance of Prenuptial Agreements – if every couple had one it’s likely there would be far fewer disputes about finances. Divorce solicitors would be twiddling their thumbs and tumbleweed would be blowing along the corridors of our family courts.

But does the idea of a Prenuptial Agreement make you feel uncomfortable? It doesn’t sound like the most romantic idea in the run up to your marriage. And what about the wedding vows, how does a Prenuptial Agreement fit in with “until death do us part”?

But some say that a Prenuptial Agreement (or Pre-Registration Agreement for civil partners) proves in black and white that you’re not marrying for money, but for love.

And another way of looking at it is that it’s not planning for failure, but an insurance policy.

A Prenuptial Agreement is a contract freely entered into by a couple prior to their marriage setting out what will happen if they divorce. This is of particular concern in the case of assets brought into the marriage, or if there is an inheritance, or if there are children of an earlier relationship. If the Prenuptial Agreement is prepared with the assistance of an expert family solicitor, it stands a good chance of being upheld by the court if one or other of the couple go back on it.

The ITV series, “Victoria”, has reminded me of the young Queen’s passionate attachment to her adored Albert. When she asked him to marry her, he accepted, but they weren’t just billing and cooing in the run up to their wedding, they were thinking about how much Albert’s annual allowance would be.

Queen Victoria and Prince Albert were happily married for 21 years and had nine children. Their marriage only ended on Albert’s tragic death. But before they married they both recognised the importance of sorting out the finances.

And here are two essential points. It doesn’t mean that you aren’t committed to each other, that you won’t have a long and happy marriage. But it does mean there is an agreement between you.

This agreement of course has the potential to save you a great deal of money in terms of solicitors’ fees.

But unfortunately in the case of Queen Victoria and Prince Albert, Parliament interfered and reduced the amount Albert would receive. The young couple were not amused, in fact they were both highly annoyed.

You don’t need to worry too much about Parliament interfering, but do you want to risk the interference of the courts? If you don’t have a Prenuptial Agreement and your marriage or civil partnership breaks down all the finances are up for grabs. The court’s approach is that the ownership of any asset, whether it be in joint or sole names, and whenever it was acquired, can be changed.

As I have mentioned in a previous post this leads to uncertainty. That’s the downside. The upside is that it’s a flexible approach which takes into account differing circumstances.

But the thing about having a Prenuptial Agreement is that it can provide a degree of certainty. This can be particularly important if one of the couple is wealthy.

This was true of Miss Radmacher, a German heiress thought to be worth £100m, who married Mr Granatino, a French banker, in London in 1998. Before their wedding they entered into a Prenuptial agreement, the intention being to protect Miss Radmacher’s wealth.

Sadly after eight years and two children the marriage failed and despite their Prenuptial Agreement Mr Granatino made a claim against Miss Radmacher’s wealth. But the court upheld the Prenuptial Agreement, making the point that at the time the couple agreed it, they intended to stick to it and were fully aware of the financial position.

So although such Prenuptial Agreements are not automatically enforceable, since the important case of Radmacher v Granatino they carry a great deal of weight if drawn up with the assistance of an expert family law solicitor.

Of course the longer you are together the more likely it is that your circumstances will change. For example you could start a very successful business. If your Prenuptial Agreement no longer suits your circumstances it can be revised if you both agree.

Or if you don’t have a Prenuptial Agreement, you can enter into a Post Nuptial Agreement. 

In fact it’s never too late. Even if your marriage has broken down and you have decided to divorce you can enter into a Separation Agreement. This could provide for you to live separately for two years and then divorce. It could set out all the arrangements for property and money and the children in the meantime. As is the case with a Prenuptial Agreement, it would carry a great deal of weight if drawn up with the assistance of an expert family law solicitor. 

And don’t forget that if you want to enter into a Prenuptial or Post Nuptial or Separation Agreement, or you have an existing agreement and would like to renegotiate it, collaborative law or mediation is available if you are having difficulties with the fine details.

Do you like the idea of divorce solicitors twiddling their thumbs and tumbleweed blowing along the corridors of our family courts? Is a Prenuptial Agreement the answer? If you have an opinion, please leave us a comment. We would be interested to read it.

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JUST FAMILY LAW are specialist divorce and family law solicitors offering personalised legal solutions.

Visit our website just-family-law.com

The topics covered in this blog post are complex and are provided for general guidance only. If any of the circumstances mentioned in this blog might have application to you, you should seek expert legal advice.

 

Photograph by Lies Thru a Lens

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