Sir Paul McCartney is rumoured to be the fourth richest man in the music business and his new wife, Nancy Shevell, is the daughter of American trucking magnate Myron “Mike” Shevell. They are both successful and wealthy in their own right and Sir McCartney has reportedly turned down the offer of a pre-nuptial agreement. They have married for love, not money.
Paul was right - money can’t buy you love, but the institution of marriage has historically been favoured in the legal and tax system. So, what are some of the main legal and tax benefits to marriage and civil partnerships?
Intestacy
If you die without a Will, your estate will probably pass to your relatives under the ‘rules of intestacy’. If you have a partner and you are not married or in a civil partnership, your partner will not receive anything. But, if you are married or you are in a civil partnership and you die without a Will, at least £250,000 of your estate will pass to your spouse, maybe more, depending on whether you have children. But, if you want to ensure that your spouse inherits everything, it is advisable to make a Will.
Inheritance tax
Perhaps one of the most significant tax advantages of being married is the inheritance tax saving from using the ‘transferable nil rate band’ and ‘surviving spouse exemption’. Currently, an individual’s inheritance tax threshold is £325,000. If you are single and you die with more than £325,000 in your estate, your estate could have to pay tax at 40% on anything above the threshold. But, if you are married or in a civil partnership, it is possible, in certain circumstances, to transfer up to £650,000 tax free. This means that being married can save up to £130,000 of inheritance tax!
Capital gains tax
Individuals are taxed on gains that they make when assets such as property and shares are given away or sold. Each individual currently has a capital gains tax annual exemption of £10,600. This means that each individual can make up to £10,600 of personal gains each year without incurring a tax liability. Married couples can transfer assets between themselves free of capital gains tax which means that it possible to make use of both annual exemptions when giving away or selling certain assets.
Income tax
It is still possible for married couples, or those in civil partnerships to benefit from the Married Couple’s Allowance if one spouse was born before April 1935. If you are eligible for Married Couple’s Allowance, your tax saving could be between £280 and £729.50 each year.
Although we should not make a personal commitment for tax reasons we should at least make the most of the tax planning opportunities available to the benefit of both parties.
Kate Maybury is a solicitor in Raworths’ probate, wills and trusts unit.. To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively you can email Kate at kate.maybury@raworths.co.uk
