Unmarried couples over 70 at risk of large IHT bills as cohabiting rises – Continuum

As marriage is in decline and the number of over-70s cohabiting without getting married or entering a civil partnership is booming, large numbers of couples risk having to pay large inheritance tax bills should one pass away, according to national IFA firm Continuum. 

The number of couples choosing to cohabit has increased massively over the past two decades, Continuum said. According to the latest figures from the Office for National Statistics (ONS), in 2002 there were 45,066 over 70s in England and Wales cohabiting in this way. By 2020 this had increased 288% to 175,028. 

The figures also showed that the number of people of all ages living in a couple but never married or civil partnered has almost doubled from 2.84 million in 2002 to 5.08 million in 2022. 

Continuum said marriage remains popular, but it is not the only lifestyle choice: “Cohabiting with a long-term partner and deciding against marriage or civil partnership is part of modern society, but many of those who take that route could face complications when money is involved if not planned for correctly.” 

Ben Alcock, an IFA at Continuum, added: “As any lawyer will tell you, there is no such thing as a ‘common law partner’. Although there may be social and other obligations, without a formal contract of marriage or civil partnership, there are few automatic rights over money or even things like a shared home. If one partner owns a property in their name alone, the surviving partner has no clear right of ownership or habitation if the owner dies.” 

He said that blood relatives who have been strangers for decades or the taxman can be the ones who benefit rather than a much-loved partner. “There are ways to protect a home by arranging it to be in ‘common ownership’ when the property is bought. But the problem of inheritance tax remains.” 

Alcock added that by taking full advantage of allowances, and structuring wealth correctly, it may be possible to safeguard wealth for those people leave behind. “Succession planning is a complex field and requires in depth knowledge of tax and many other areas where rules and regulations have mounted up.”

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