CIVIL PARTNERSHIPS
The Civil Partnership Act 2004 came into force on the 5th December 2005.
A civil partnership is a legal commitment, which can be entered into by two people of the same sex who thus obtain legal recognition for their relationship. Couples who enter into a civil partnership will gain a new legal status of ‘civil partners’.
In order to enter into a civil partnership couples must both be over the age of 16, of the same sex, not already in a civil partnership or marriage and not closely related.
The Civil Partnership Act provides that civil partnerships are treated similarly to married couples to a limited extent in relation to some aspects of the law for example taxation and inheritance law, and state pension and pensions from other providers, and means tested benefits.
Taxation
With the new legal status comes access to inheritance tax and capital gains tax exemptions.
When a civil partner dies the survivor of a civil partnership enjoys the exemptions from inheritance tax previously only available to a surviving spouse i.e. all property passes free of inheritance tax.
It has recently been reported that a million more people may now have to pay inheritance tax due to the rise in house prices together with the inheritance tax threshold which currently stands at £285,000. It has never been a more prudent time to ensure you have taken advice to mitigate your inheritance tax liability. The mitigation will save tax on the death of the surviving civil partner.
This can be achieved by tax efficient wills and/or by effective lifetime planning. Civil partners can transfer assets to each other free of capital gains tax. They do not pay capital gains tax when the main residence is sold, and if they happen to own two dwellings then they need formally to elect which property is to enjoy the exemption.
Inheritance Law
Any existing will automatically becomes void when a person enters into a civil partnership. In the absence of a will, the surviving civil partner will have the same intestacy rights as a spouse, but these are far from generous so to make new wills is extremely important. If a civil Partner has died and the will does not make “reasonable financial provision” for the surviving civil partner, he or she will be able to challenge it.
Contact Us
|
|
|
