Published on: 1st June 2020

Partners and Inheritance Tax Advice

Living together as partners (as opposed to civil partners or as a married couple) can have negative inheritance tax consequences so it’s important to take the correct inheritance tax advice to pass your estate on as tax efficiently as possible. Let us initially look at (shall we call our imaginary couple) Boris and Carrie living together as partners. Boris has two children from a previous relationship being Donald and Angela. Carrie has no children.

Example 01 : Boris and Carrie did not request an appointment with a Casey & Associates Consultant and did not know about tax efficient Wills for partners.

Family home (owned by Boris and Carrie) valued at £600,000
Boris has savings of £100,000
Carrie has savings of £90,000

Boris dies first. He leaves everything to Carrie. His estate is valued at:
50% of the family home = £300,000
Savings = £100,000
Total = £400,000
Inheritance tax allowance = £325,000
Inheritance tax = 40% on £75,000  = £30,000
Assets transferring to Carrie = £370,000
Carrie now has assets of £760,000

A few years later Carrie dies leaving her assets to Donald and Angela. Her estate is valued at:
Family home = £600,000
Savings = £160,000
Total = £760,000
Inheritance tax allowance = £325,000
Inheritance tax = 40% on £435,000 = £174,000
Donald and Angela receive £586,000

Example 02 : Boris and Carrie took advice from their friend Rishi and made an appointment with a Casey & Associates Consultant who created tax efficient Wills for Boris and Carrie.

Boris dies first. He places £325,000 of his assets into a tax efficient trust for Carrie to use (and Donald and Angela can also use the funds in the trust if needed and if Carrie agrees). He leaves everything else to Carrie.  His estate is valued at:
50% of the family home = £300,000
Savings = £100,000
Total = £400,000
Inheritance tax allowance = £325,000
Inheritance tax = 40% on £75,000  = £30,000
Assets transferring to the tax efficient trust = £325,000.
Assets transferring to Carrie = £45,000
Carrie now has assets of £435,000 and she has use of the assets in the trust valued at £325,000.

A few years later Carrie dies leaving her assets to Donald and Angela. Her estate is valued at:
Family home = £300,000
Savings = £135,000
Total = £435,000
Inheritance tax allowance = £325,000
Inheritance tax = 40% on £110,000 = £44,000
Donald and Angela receive £391,000 from Carrie and £325,000 from the tax efficient trust which totals £716,000.

In example 01 with no advice Donald and Angela receive : £586,000
In example 02 with advice from Casey and Associates Donald and Angela receive £716,000

The result of taking inheritance tax advice from a Casey & Associates Consultant gives Donald and Angela a massive benefit of £130,000.

If you are a couple living as partners and your total assets are over £325,000 please contact us so that we can discuss tax efficient Wills and help you save some inheritance tax.

Your Casey & Associates Consultant can help you make the choices that are right for you.

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DON’T DELAY ~ ACT TODAY!

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