Couples who aren’t married face an unexpected inheritance tax bill from HMRC due to a common myth. Couples who have lived together may believe they become ‘common-law spouses’, a term frequently used but having no legal recognition.
Unmarried couples are being warned they could be set for an inheritance nightmare, due to the “common law” myth. Family lawyer James Myatt warns, if one partner dies, the survivor is not automatically entitled to their assets like married couples.
And their estate will go to the legal next of kin instead, he said. Even if they own a house together, the deceased’s share could go to the next of kin, meaning surviving partners may have to sell their half of the house, he has warned.
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The partner at Shakespeare Martineau law firm said: “While we’re not telling people to rush off and get hitched, we are warning against the myth of ‘common law marriage.’ Although a commonly used phrase, legally it has no meaning in this country.”
Mr Myatt said: “First, ensure that your will is up-to-date and names your partner as a beneficiary. Cohabitees are not legally considered next of kin and will not automatically receive anything upon their partner’s death.” Many unmarried couples still believe they have the same rights are married couples – therefore, many do not realise they have to actively make a claim for inheritance when their partner passes away.
If a couple owns a home together and they are both on the title deeds for the property, he also advised considering the “survivorship destination”. He added: “This could result in the surviving partner being forced to sell or leave the property against their wishes.”
And Mr Myatt concluded: “While nothing apart from getting married or entering into a civil partnership will exempt your partner from paying inheritance tax, it’s important to make sure that legally you’ve made your wishes clear to limit confusion and ensure they receive everything you intend them to.”