To marry or not?

[kursaalflyer]

DP and I have lived together since the early 80s and have three grown up children. In the next few weeks we are dealing with a redundancy payment (DP), retirement for both of us and an inherited property for me. We own our own property worth c.550k and have 100k+ invested in various funds. Adding it all together we were shocked by how much we will be worth as we have always lived quite frugally I suppose, no big cars, holidays etc so want to be able to leave our dds the bulk intact as there is no chance they will be able to afford to buy their own properties sadly. Musing today we didn't know whether it makes sense to get married? It hasn't crossed our minds for the last 35 years but today we learned that DP's pension has quite a hefty lump sum attached and made us realised we haven't done any financial planning. Although we will talk to a financial advisor in the next couple of weeks we didn't know whether getting married would maximise our tax-free entitlements? E.g. IHT?

It very much depends how much you will be worth. Will the RP and inherited property take you as each individual over the iht threshold? How do you currently own the house as T in C or joint tenants? Do you have wills?

Providing you have both made wills, and your positions are protected if the other dies I can't see it will make much difference unless you each intend to leave all your property and holdings to each other, in which case you should marry as otherwise the one left will have to pay iht on the whole above 325k when they die. If married the limit is 650k because the surviving spouse can use the unused portion of the demised spouses iht.

It looks like you have around £650k between you. The tax-free allowance is currently £325k.

If you hold the property as joint tenants and all the investments are in joint names, they will automatically pass to the survivor and will not form part of the deceased's estate. However, if the property is owned as tenants in common and the deceased has investments in their own name, they may go over the tax-free allowance meaning IHT has to be paid on the estate. Assuming the survivor gets everything, their estate would be worth £650k+ so would definitely attract IHT.

If you marry, anything you leave to your partner will not be subject to IHT. Even better, any unused portion of the tax-free allowance is transferred to the survivor. That potentially gives them a tax-free allowance of £650k, so there would be little or no IHT to pay.

So yes, it will make a difference. With an estate of that size, marrying will almost certainly reduce the amount of IHT you have to pay.

Also look at the pension transfer rights - some pensions have a widows element attached.

Thank you for your replies. We think we are joint tenants but must look that up! Yes, with me inheriting a property that is going through probate and then my mum's property within the next couple of years (she's in her late 90s) I will definitely go over the IHT limit. DP's redundancy payment and maximum lump sum for his pension would be within the limit for him unless the final figures go above the forecasts. Our wills leave everything to each other. So, it looks as if being married would definitely be a better bet. Thanks again. I hear wedding bells