To wonder why there isn’t public outrage about this?

[Blusterylimp]

If a couple isn’t married but own their property between them, the surviving one will need to pay inheritance tax on their partners half of the house (and other assets) if they die.
Effectively they will lose their home to pay the IHT unless they also have huge savings.
How can that be allowed in this day and age when so many couples cohabit without getting married?

I don't find it outrageous, and even if I did, it would be about number 739 in the queue of things clamouring for the use of my outrage glands right now.

They need to own it as joint tenants for a deceased's half to automatically go to the other joint tenant.

@Blusterylimp then both get insurance policies to cover this it sits out of your estate and can be paid within the six month limit

if you both get one it will mean the other can stay

the thing is for an awful lot of things there are others things you can do to cover it - marriage/civil partnership just means you don’t have to

you have realised there is an issue so now work to solve it

A lot of the replies are effectively “because that’s the way it is”
No one has explained why the joint home couldn’t be excluded for IHT purposes for cohabiting couples to avoid the situation where the surviving partner had to sell their home to pay the IHT.

This could be limited to properties which were owned as joint tenants so it wouldn’t impact people who hadn’t decided to leave their half to their partners (for example if they wanted their DC to inherit their half of the house)

I wouldn’t be proposing that the rest of the dying partners assets were excluded from IHT so the tax treatment would still be different to that for married couples and those in a civil partnership.

Surely if you got married and the marriage subsequently broke down it isn’t a given that he would ‘come for your savings’. I mean if both parties agree with a financial settlement (which could be simple as sell and divide joint assets, cash etc and leave individual savings alone) then there isn’t an issue? It’s only if he decided he wanted more in a financial settlement that you have a problem. And would judges even entertain dividing assets or savings that were built pre marriage? Maybe you need to sit down and agree expectations and then get legal advice? You could be cutting your nose off for a hypothetical situation which may never occur, the benefits of marriage should one of you die however are significant. You need to weigh up which will be more important to you.

But why should the law change? I'm sure we can all think of endless changes to the tax system that we would personally enjoy, that doesn't mean they should be implemented. What you're describing is entirely solved by marriage or civil partnership. Why would the government want to help fewer people pay tax?

I am more concerned with water companies giving millions to share holders and then putting our bills up.
It’s common knowledge you have no rights when you’re not married. It’s up to the info to make an informed decision on their relationship.u
Meanwhile we are getting shafted with increases in water rates we don’t have any say in.
Same with the tv licence.

OP@Blusterylimp cohabiting couples are far more likely to split up , especially when kids are involved ,so it’s absolutely crucial that couples seek financial advice when choosing to cohabit .

Yes, this is true. I would be flabbergasted if he did come for my savings if we got married and divorced. He is a very moral person but still it is a small risk.

If my DH dies before me I wouldn't remarry because I would want to protect our assets for my DC but I might one day have another relationship. If a system is introduced that decides at some point a cohabitating couple are in fact entitled to each other assets then I would be either either depriving my DC of their inheritance or facing the next potential 40 years alone. If I choose not to marry again to ring fence my assets I would be gutted if they then defaulted to a future partner.
If you want join assets marry or get a civil partnership but if you want to play what's mine is mine until I die then it is joint think about the implications for those who do want to retain separate pots in both life and death.

@Blusterylimp as I said above just get an insurance policy so you don’t have to sell it

i think the issue is even though you own it together the rest of your assets are separate - for tax purposes married couple can share tax allowances and this is another example of that. It is the tax allowance that is shared rather than being linked to joint tenancy ownership.

when the surviving spouse does it automatically means the tax has to be paid by the next of kin who inherit the hiuse this is no different

so it is a tax benefit given specifically to married couples

I've never lost a bet based on how stupid people are.

I've lost a few on how clever people are.

P.T. Barnum did more for philosophy than Aristotle, Plato and Socrates combined.

Didn’t quote the post I was replying to

It wouldn’t affect you if you didn’t leave your half of the property to your partner though. You would leave it to your DC so what I was proposing wouldn’t risk your DC inheritance.

Sorry, but you're mistaken about that. It doesn't work that way.

A lot of the replies are effectively “because that’s the way it is”

Why do you think that is ?

If unmarried people are to be treated as married under the law then there needs to be an opt out for people who don’t want that. I’ve lived with several people, romantically and not, who I didn’t want to be tied to legally and financially. People should be allowed to have lodgers, move in boyfriends, have down on their luck friends to stay for the medium or long term without suddenly having those people inherit from them after switching their life support off.

I’m married to my dcs father. If I’m widowed or divorced I think it’s unlikely I will marry again as I want to protect my assets for my dc. I do want to option of cohabiting without it meaning more than that and I certainly don’t want a lodger, friend or carer having a claim on my estate because they’ve lived in my house for 5 minutes. Personally I prefer the “opt in” system of marriage and I don’t think it onerous to take 30 minutes out of your day to sign some forms in front of an official. The system is already under massive abuse, mostly from visa false marriages but there have also been cases where men have married elderly dementia patients and inherited their houses. Putting the system online because people cba to do it in person would be a safeguarding fail imo.

Absolutely. If you're not married/CP then the value of your share of the house will be counted for inheritance tax along with your other assets in order to calculate the IHT due. However there is a recognition that this can lead to hardship so IHT on the house is payable in installments of 10% pa for 10 years or until the house is sold (then the balance of the IHT is payable at that point). The installments rule is mainly used so that executors don't have to pay up on property before its sold (as you can't sell until you have probate and you can't get probate with paying IHT) but it also applies in circumstances where a beneficiary lives in the house. https://www.gov.uk/paying-inheritance-tax/yearly-instalments

It’s quite funny that people are saying that I must be stupid for not knowing this and then multiple posters are quoting totally incorrect information about joint tenants/tenants in common.
There is a lot of confusion about IHT rules.

The OP is talking about IHT, not who will inherit.

Even if someone is married, they can leave their estate to their wider family, they don't need to leave it to their spouse.

Because people aren’t actually listening to what I am saying and don’t have the intellect to see other points of view?

Most divorced people who are in these types of situation also loved their partners and thought the world of them at some point but once you separate everything changes
You could possibly see a different side to Mr / Mrs nice guy especially when lawyers are involved

Definitely something to consider then. Because at the minute, it’s guaranteed one of you will die and leave the other with a tax bill which will have financial implications like needing to sell and you need to weigh that up against the risk of marriage and divorce and whether he’d drag you through a messy settlement. I mean, truthfully I’m sure the advice both of you would get if you have no kids, your own savings/financial parity/ability to earn is to go for a quick clean break. These cases where there’s a settlement is usually a SAHM married to a high earner where either everything is joint or in his name or one party risks having nothing when the marriage ends. But those cases got to be few and far between these days as most of us have to work!

don’t discount the next of kin side of things too. Again if your partner dies, none of the banks etc will deal with you so getting things sorted is very tricky and you might effectively be cut out of dealing with things which could be upsetting at a time of grief. Same for him if you were to pass.

You only need to pay IHT if half of the property value plus any other assets (savings etc) adds up to more than £325,000.

Joint tenants means that house passes to the survivor rather than next of kin, if there is no will but does not protect from inheritance tax.

If you are joint tenants then the surviving partner inherits the house fully - but if there is not a will, then any other assets (belongings, money, investments, pensions etc) will pass to the next of kin (children, parents, siblings, uncles and aunts, cousins - in that order).

If you really don't want to get married or enter a civil partnership and want each other to inherit everything, make sure you have valid wills and power of attorney in place for health and finances so you can make decisions for each other and just accept that you will have to pay IHT on anything over the £325 000

the PoA thing is probably the most important - a lot of people get wills, but overlook the power of attorney thing - if you are unmarried without a power of attorney and something happens which means you do not have capacity, only next of kin will be able to make decisions (example of a worst case scenario being switching life support off / who can visit in hospital)

But that would mean I have to ensure a water tight valid will at all times - wills are invalidated by chances in circumstances so it would mean that the first thing on my mind would have to changing my will even in the face of bereavement. Currently in that situation my DC would remain my heirs automatically but if the system were to change I would have to over ride that and legislate for how they get their inheritance out of the property.