Growing number of over 70s risk large IHT bills

Growing number of over 70s risk large IHT bills

Since 2002, the number of over 70s choosing to cohabit with their partners rather than marry or enter civil partnership increased by 288%, and by doing so could inadvertently be putting their homes at risk.

Figures show that 45,066 people over the age of 70 were cohabitating with their partner in 2002 in England and Wales, but this figure jumped to 175,028 in 2020 as marriage has declined and cohabitation lifestyles have steadily increased in popularity.

Experts have reported an increase in advising unmarried couples over the age of 65 that their homes are subject to inheritance tax when one partner dies, leaving their share in a joint home to the surviving partner.

Ellie Sawkins, investment analyst at Wealth Club commented to the Daily Mail:

“This tax liability would be due within six months, and so for many might mean that as well as dealing with the loss of a loved one, they are forced to sell their home, and quickly. A quick sale will almost inevitably mean having to reduce the price of the property, which is a double whammy for those already grieving the loss of a loved one. Cohabitants need to put real thought into how they address this problem.”

Ben Alcock, independent financial adviser at Continuum, also commented:

“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.”

While to many the current rules seem outdated and unreasonable, under inheritance law, an estranged blood relative would have more rights over the estate than a cohabiting partner, and taxes also claim more legal rights to an estate than a much loved partner.

But advice can be given to cohabiting partners. For example, arranging for a home to be in common ownership when it is first bought can ensure that neither of the pair go homeless in the worst case scenario. Or alternatively, entering into proper succession planning with trained advisers.

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