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Is living together good for your wealth?

What are the legal implications of living with someone? What happens to jointly owned property when one of you dies?  What are the tax consequences of inheriting property?  We set out below some of the things you need to consider if you are in a relationship but are not married or in a civil partnership.  It may be the case that you do not even live in the same  property as your partner, however, you will be subject to some of the points that we make below.

  1. Inheriting assets

In the absence of a marriage, civil partnership or a Will, you will not inherit anything from a partner on their death.

  1. Jointly owned property

If you have a joint bank account or own a property as beneficial joint tenants, then the property will automatically pass to the survivor on the death of one of you. This is the case with most jointly owned assets. If you own a property as tenants in common however  then you don’t inherit the deceased’s share automatically. It will pass under any will they have or in accordance with the laws of intestacy.

  1. Trusts and the Inheritance (Provisions for Family & Dependants) Act 1975

Notwithstanding  that you may not inherit anything from your partner, you may be able to show there was a constructive trust in existence between you, with the result that you are entitled to some of their assets following their death.  Alternately, you may be able to show that the principle of estoppel applies.  This is where you have acted to your disadvantage as a result of a promise which has been made to you by your partner, and the promise is not fulfilled, e.g. “You help me pay the mortgage on my property and I will leave it to you in my Will”.  You are not left the property in their Will.  At the very least you should be able to recover the mortgage payments that you made.

Anyone who is wholly or partly dependant on their partner, or has been living in the same household as their partner for a period of two years ending immediately before their death, as husband or wife, can bring a claim under the Inheritance (Provision for Family & Dependants) Act 1975 on the basis that their Will or intestacy does not make adequate financial provision for them.

  1. Intestacy

Where a person dies intestate their estate will pass to any spouse, who is then living (this meaning any spouse who remains in a marriage or civil partnership which has not been ended notwithstanding  that the parties may have been separated for many years), together with any children or grandchildren that they may have had.  In the absence of such people it will pass to the nearest living blood relatives.  You partner inherits nothing notwithstanding you may have lived together for decades. They may have right as set out above, but its much easier if you make a will.

  1. Inheritance Tax and Capital Gains Tax

If you inherit assets from someone you are not married to or in a civil partnership with then you will pay Inheritance Tax if the asset is worth more than £325,000. If they have given you any gifts in the 7 years before they die or made other gifts, then the tax allowance may be less. Many couples have term assurance, so their mortgage is paid off if one of them dies.  This does  increase the value of the property which means more Inheritance tax can be due. If you make gifts to your partner of assets which have increased in value since you acquired them then you may have to pay capital gains tax.

If for example you inherit your partners share in a property when they die because you owned it as beneficial joint tenants, you could find you have to pay Inheritance tax.

All assets passing between people who are married or are in a civil partnership, are totally free of Inheritance Tax and Capital Gains Tax.  They can also inherit each other’s Inheritance Tax allowances.  A persons Inheritance Tax allowance can be worth up to £500,000.  Capital Gains Tax is payable not only when an asset is sold at a profit but also when it is gifted and has increased in value.  If you give any asset apart from your home, in whole or part to a partner, then this will give rise to a liability for Capital Gains Tax.

  1. Life Policies

Many people do not wish to be married or in a civil partnership.  The resulting tax consequences can be significant.  You can look to mitigate these by putting Life Assurance in place.  We do not provide financial advice however we are happy to refer you to people who can advise on such products.

  1. The legal and tax implications of living together

Where you share assets with anybody that you are not married to or in a civil partnership with, there are a number of legal and tax implications which you need to think about, and we recommend that you take legal advice on all such matters.


For more information contact ngeorge@garner-hancock.co.uk or jkotan@garner-hancock.co.uk

This is general advice and is meant for information purposes only.  It should not be relied upon and specific advice should be obtained on any legal problem. 

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Our Wealth Protection Solicitors

Mr. Nigel George

Head of Private Client

0208 232 9560

Mr. Massimo Cairo

Senior Paralegal


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