In between Brexit negotiations and becoming a Dancing Queen, Theresa May has found the time to announce that civil partnerships will now be extended to mixed sex couples.
The announcement follows a lengthy court case lead by Rebecca Steinfield and Charles Keidan, who had applied to be civil partners prior to the law change. Ms Steinfield and Mr Keidan wanted the tax benefits and legal security of a marriage, but felt the institution of marriage was patriarchal and sexist. They attempted to register a civil partnership and were denied because they were a mixed sex couple and the wording of the Civil Partnership Act 2004 specifically references same-sex couples. They appealed the decision and were denied in the High Court and the Court of Appeal however, the Supreme Court ruled that it was a breach of their Human Rights to deny them a civil partnership.
There is now to be equality in marriage and civil partnerships between mixed and same sex couples.
The extension of civil partnerships allows the 3.3 million couples who are currently co-habiting to get legal recognition for their relationship, even if they don’t want to marry. It is a very common misconception that co-habiting couples are ‘common law married’. Common law marriage is the idea that by living together for a certain number of years that they gain the same legal rights as a married couple, this is in fact an urban legend. Cohabitees do not have any legal rights after a person dies or upon separation.
If you die without making a Will, your estate will be dealt with under the laws of intestacy. The laws of intestacy are somewhat archaic and have not caught up with modern relationships. If you die without a Will your cohabitee will not inherit under the intestacy rules, even if you have lived together for decades. Your estate would likely be inherited by your parents or sibling who, sadly, may not do ‘right’ by your partner. However , if you had entered into a civil partnership or marriage, the first £250,000 of your estate would be inherited by your partner.
There are also the same tax benefits to entering into a civil partnership as there is a marriage. As an individual you have a nil rate band of £325,000 before you have to pay inheritance tax. The government also introduced a residence nil rate band of £125,000 which applies when you own a home and leave it to lineal descendants. Therefore, as an individual or a cohabitee you could have up to £450,000 before you have to pay inheritance tax.
However, if you are married or have entered into a civil partnership, then your nil rate band is transferable. When someone dies they would usually leave the majority of their estate to their spouse. The gift of their estate to their spouse will be exempt of inheritance tax as long as it is below their nil rate band rate. Therefore, their £450,000 will not be used up and it can be transferred to their spouse. On the death of the second spouse there will be £900,000 of nil rate band before inheritance tax needs to be paid, as long as they are leaving their property to lineal descendants. These benefits will now be open to mixed sex civil partnerships meaning that mixed sex couple who don’t want to marry, can receive the same tax benefits.
Should you wish to obtain a will or require estate planning advice regarding inheritance tax please contact Emily Robertson at mailto:erobertson@jacksons-law.com or call 01642 356545.
