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Inheritance Tax Planning For Unmarried Couples | What To Do

If you’re unmarried and your partner dies, you may have to pay inheritance tax on any money or property they leave you. If you’re married, your spouse won’t have to pay this tax, so it can be a big headache if you don’t want to leave anything to them. 

But there are some things you can do to make sure that doesn’t happen. One option is to make a will, which sets out how your property will be distributed after you die.

Luckily, there are many ways to reduce or avoid Inheritance Tax (IHT) – even if your partner doesn’t have a will. 

Pearl Lemon Accountants Inheritance Tax Planning For Unmarried Couples  are here to help you and simplify this situation. Contact us now and start planning!

Inheritance Tax

An inheritance tax is levied on a deceased person’s estate. It is also known as Estate Tax or Death Duty in some countries. In the UK, inheritance tax is charged on estates valued above £325,000, with a rate of 40% applied to any amount over this threshold.

The value of an estate includes all assets, such as property, investments, and possessions, minus any debts or liabilities at the time of death. The responsibility for paying inheritance tax falls on the executor or administrator of the estate.

However, if there is not enough money in the estate to cover the tax bill, it may need to be paid by beneficiaries who have received gifts from the deceased before their death.

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Inheritance Tax Planning For Unmarried Couples

Inheritance tax is a subject that many people don’t like to consider, but it’s important to know how it works to ensure your loved ones are financially secure after you’re gone. If you’re an unmarried couple living in the UK, there are some key things you need to be aware of when it comes to Inheritance Tax Planning For Unmarried Couples.

First, it’s worth noting that married couples and civil partners have certain advantages over unmarried couples regarding inheritance tax. They can transfer unlimited assets between each other without being subject to any inheritance tax.

However, for unmarried couples, this isn’t the case. Any assets left by one partner to another will be taxed at 40% if they exceed the threshold of £325,000.

One solution could be creating a will with specific instructions about how you want your assets distributed. This way, you can ensure that your partner receives what they are entitled to without any complications or surprises.

Highly Appreciating Assets

One key factor that can add complexity to the situation is highly appreciating assets. These assets, such as property or investments, can significantly increase in value over time and create a larger inheritance tax bill for those who inherit them

To navigate this issue, unmarried couples must have wills that clearly state their wishes regarding these assets. Without a will, the surviving partner may not have any legal right to the highly appreciating asset and could face significant inheritance tax implications if they do inherit it.

Furthermore, if the asset is left to someone else entirely because there was no will in place, then Inheritance Tax Planning For Unmarried Couples may still be payable on its increased value since the purchase date.

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It’s All About Wills!

For unmarried couples, Inheritance Tax Planning For Unmarried Couples can be a tricky and confusing issue to navigate. When one partner passes away, the other may not automatically inherit their estate without a will in place.

In the UK, if someone dies without a valid will, their assets will be distributed based on intestacy laws. This means their estate could go to family members rather than their partner.

To avoid this situation, unmarried couples must create a will outlining how they want their assets distributed upon death. This document should include specific instructions for who inherits what and other wishes, such as funeral arrangements or care for children or pets left behind.

When creating a will, seeking advice from Pearl Lemon Accountants Inheritance Tax Planning For Unmarried Couples  specialising in this law area is important. They can ensure the document is legally binding and tailored to your needs and circumstances.

Discretionary Trust (DT) Wills

In the UK, inheritance tax can be a major concern for unmarried couples who want to ensure that their partner will inherit their assets after they pass away. 

One solution to this problem is to create a Discretionary Trust (DT) Will. This type of will allows the testator (the person making the will) to set up a trust that can distribute assets in a flexible and tax-efficient manner.

A DT Will can help unmarried couples avoid some of the pitfalls of inheritance tax on their estates. When you make a DT Will, you set up two trusts for your partner and any other beneficiaries you choose.

The trustee(s) have discretion over how to distribute assets from these trusts, which means they can take into account changes in circumstances or changes in tax laws.

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Leaving Assets To Charity

It is worth considering how charitable donations can help reduce any potential tax liabilities. By leaving assets to charity, individuals can ensure their wealth goes towards causes they care about while benefiting from a reduced inheritance tax bill.

The UK has several legal requirements when creating a Will for individuals and unmarried couples. You must consult with law and finance experts, like Pearl Lemon Accountants Inheritance Tax Planning For Unmarried Couples, before leaving assets behind for charitable purposes.


In conclusion, Pearl Lemon Accountants Inheritance Tax Planning For Unmarried Couples can help you plan inheritance tax for unmarried couples. We can provide you with a plan that will reduce the tax you have to pay, and we can help you make the necessary changes to your estate plan to align with your specific needs. 

If you would like more information on how our company can help, please do not hesitate to contact us.

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If one of the partners dies without a will or other estate plan, their assets could go to their spouse or children instead of their loved ones. This can create serious financial instability and lead to legal battles over who gets what.

Another risk is that if one of the partners becomes incapacitated, they may be unable to make decisions about their assets or care for themselves financially. If this happens, their spouse could be forced to make tough decisions on their behalf, such as selling off valuable assets or turning down important medical treatments.

There are no specific rules or exemptions for inheritance tax planning for unmarried couples, as the law is broadly based on the principle that any property, including assets acquired before marriage, will be treated as if the individual’s spouse had inherited it. This means that any estate planning considerations should be tailored to each individual couple’s specific circumstances.

There is no definitive answer to this question as it depends on a number of factors specific to your individual case, including your income and estate size. However, the amount you should pay in inheritance tax in the UK is 40% of the total value of estate assets.

When you allow us to keep track of your finances, you give yourself more time to do your work and please more clients. It's a win-win situation for everyone. Aside from that, you'll also gain financial stability because your assets and liabilities are managed well enough not to cause any trouble for you in the future.

So let our experts work for you, and you won't regret it even a bit.

Book a call today to get started.

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