Let’s face it, marriage (or civil partnership) isn’t for everyone. It’s a big commitment, and comes with a lot of legal bits and pieces that can take a while to get your head around. But for many, marriage isn’t just a way to show our partner that we love them. In a happy relationship, such a grand gesture isn’t always needed. But believe it or not, there are still some pretty big benefits to getting married that have nothing to do with love. Let’s look at one area in particular – the finances. Whilst there have been some changes to the rules and what’s available over the years, it’s still the case that getting married can actually leave you better off as a couple than if you remained unmarried. When it comes to writing Wills for married or unmarried couples, there is much more certainty and protection for married couples than unmarried. Want to know more? Let’s dive in.
Let’s start with the easy one – as a married couple, you get a nice tax break. The Marriage Allowance can save married couples up to £238 by letting the lower earner in the couple transfer £1,190 of their personal allowance to their husband, wife or civil partner, so there is less tax to pay overall. You can also backdate your claim to April 2015 (when it was first launched), which means you could get an extra £432 (though this bit only applies if the lower earner has an income of £11,000 or less).
If that’s not quite enough, there is more. Getting married also opens up the option for inheritance tax breaks later down the line, which could ultimately save you tens of thousands of pounds. Married couples and civil partners can pass assets to their other half completely free of inheritance tax when they die, and the tax benefits can be passed on again when the second spouse dies. That essentially means that as a married couple your inheritance tax allowance is £650,000. The nil rate band has recently expanded to include main residences, meaning there is an additional allowance of £100,000 per person on the main residence when it’s passed to a direct descendant. So that means that, by the start of the 2020 tax year, married couples and civil partnerships will have a joint £1m IHT allowance on their estates! But none of this applies to unmarried, cohabiting couples.
Bigger State Pensions
If your spouse or civil partner dies, you may be entitled to extra payments from their pension or national insurance contributions as well as some of their additional state pension, which you wouldn’t be able to if you weren’t married. This comes with the caveat that you can’t have built up the full basic state pension entitlement yourself. Exactly how much you’re entitled to depends on a few things, including retirement date and age. And if you’re not at state pension age yourself and you remarry before you reach it, then you won’t be entitled to it unfortunately. But it is also worth remembering that a lot of workplace and private pensions schemes will only pass on the benefits to a surviving partner if the couple were married.
Protections After Death
If you are unmarried and your partner dies leaving no will, then you could be in real trouble. Even if you’ve been together thirty years, live together and have 20 children, it will all count for nothing in the eyes of inheritance law. Depending on how your home ownership is structured, you could even risk losing that, which is why wills are so crucial (we cover that in our article here). But if you are married, then the law gives you some measure of protection, even if your partner dies will-less. These are called intestacy rules, and help the government decide how to divide up your spouse’s assets if they left no will. As a married couple, you do have some rights, whereas as an unmarried couple, you have none. That doesn’t mean you shouldn’t have a will if you’re married – but it does add some extra protection.
As a married couple, you will also be eligible for bereavement allowance – a weekly payment from the government to help support you as you go through bereavement after your partners death. You can get bereavement allowance for up to 52 weeks from the date of death, and the weekly payments start at £35.13 (and get higher the older your partner was when they died). But again, you can only claim this if you are married or in a civil partnership.
Of course, marriage or civil partnership should always be about love at its core. But if you are a happy couple who have been together a long time, but don’t feel like marriage offers many benefits, then we hope this has helped. And if the financial benefits of marriage or civil partnership have swayed you, don’t forget that your wedding can also help other people with their inheritance tax planning! Gifts for weddings and civil partnerships are exempt from inheritance tax, so providing your guests stick within the limits (£5000 for parents, £2,500 for grandparents and great-grandparents, £1,000 for everyone else), then you could help them reduce their future inheritance tax bills too.
Whether you are married or not, writing your Will is a must if you want to help make life easier for those you leave behind as well as having your say in terms of what you leave behind, where it goes and other things such as the Guardianship of your children. Please get in touch to find out more and ask for our help in writing your Will.