Mixed sex couple entered into a Civil Partnership? Make sure you are aware of the associated benefits.
23rd January 2020 by Kate Mansfield
The New Year 2020 saw the advent of mixed sex couples being able to register a civil partnership in England and Wales, which had previously only been allowed for same-sex couples. If you and your partner are planning, or have already entered into, a civil partnership following this recent change in law then you should consider how this affects your estate.
A civil partnership is legally recognised and provides many of the benefits of marriage in terms of tax, pension entitlements and inheritance. Previously it was only a marriage that could provide such benefits for mixed sex couples. Contrary to what many people believe, ‘common law’ marriages are not legally recognised, so despite being with your partner for many years, you are not entitled to the same advantages that a married couple would enjoy.
A civil partnership only ends on death or if it has been formally brought to an end. You have to have been registered for at least one year before the partnership can be brought to an end.
In light of the benefits that such a partnership now brings, it is important to consider how this affects your Estate. In the same way a conventional marriage revokes a Will, so does registering a civil partnership. It is therefore extremely important that you review your existing arrangements. This is sensible in any event as there may now be tax planning opportunities and the tax treatment of your Estate on death will have changed.
It will now be possible to claim any unused nil rate band for inheritance tax (currently £325,000) on your death, from your late civil partner, as well as your own nil rate band. This could also apply to the residence nil rate band, subject to the criteria. There may be planning opportunities if you have been married before and your spouse/partner has died.
Whilst registering a civil partnership will give your partner equal status to a spouse under the intestacy rules it is advisable to make or review your Will to avoid those rules, which do not automatically mean everything goes to your partner.
Registered civil partners will now enjoy income tax and capital gains tax benefits and there may be other planning opportunities that can be considered.
If you would like further information on managing your estate please contact Kate Mansfield on firstname.lastname@example.org or 01202 755980.