To Wed or Not to Wed?

The traditional view is, or possibly was,

that when a couple love each other and want to spend the rest of their lives together they get married.

Nowadays with same sex couples, marriage and living together are not the only options.

They could also chose a Civil Partnership. Despite a recent challenge in court with a heterosexual couple successfully arguing the law discriminated against them as they currently don’t have the third option as things stand the dilemma remains with an option of to wed or not to wed and that is the question.

Some may feel that financial considerations and preferential treatment is given to those who are married (or in a civil partnership)

It does sway the argument in favour of “getting hitched” and certainly makes a persuasive financial argument for getting married. Take for example the inevitable fate that awaits us all sooner or later and the tax treatment on death of a spouse or civil partner compared to that of mere cohabitees. As individuals we have an Inheritance Tax allowance of £325,000 and you can make gifts during your lifetime or on your death your Estate can pass to beneficiaries up to that amount without incurring Inheritance Tax. However, transfers between spouses are exempt from Inheritance Tax and the lifetime exemption of £325,000 is also transferrable to spouses, but not long-term partners.

As a very simple illustration of the point:-

A+B have been together over 25 years. A dies leaving an Estate of £400,000. A leaves all of his Estate to his partner B, but because his Estate is over the Inheritance Tax limit of £325,000, £75,000 of his Estate is taxable at 40%, i.e., £30,000. However, if A+B had been married, all of A’s Estate would have passed to B without any tax being payable and B would have had an exemption limit of £650,000 on his or her death. Wouldn’t they have been better spending some of that £30,000 on a trip to Las Vegas where there’s a little white chapel and Elvis waiting for them?!

The rights of a surviving spouse or civil partner are also better protected both where there is a will and on intestacy where one party dies leaving no will. In the case of no will the surviving spouse or partner has rights to share in the estate as a matter of law whereas a cohabiting couple have to claim financial provision by making an application to the court within strict time limits-a matter of months from the death and a time when they will still be grieving and recovering from the trauma. Sadly despite lawyers best efforts not everybody has a will and some estimate that in Scotland only 30% are covered. Even where there is a will and they are excluded the surviving spouse is in a better position as they are entitled to claim legal rights.

Another consideration on whether to tie the knot is the risk of it all going wrong and ending in divorce.

To an extent the law in Scotland is ahead of others in that for the majority of assets they only fall into the matrimonial pot for division if regarded as “matrimonial property” and generally that will be property acquired during the marriage until the couple separate. One exception to that is the treatment of the matrimonial home which can come into the equation if considered that it was acquired in contemplation of marriage even if bought many years before the happy date.

The extent of any entitlement to claim on separation and divorce is also given different treatment. In the case of married couples or “civilly partnered” couples the standard is fair sharing which generally means equal sharing or a 50/50 split of assets unless a different split can be justified by “special circumstances”. A Cohabiting partner is likely to come out of a separation much less well provided for financially and the rights are more limited as well as restricted with claims having to be made within strict time limits of separation.

So as they say marriage is not to be entered into lightly and while financial considerations are not everything it is worth reflecting on what is best suited to how you feel and commitments that you enter into for better for worse for richer or poorer until death (or divorce) you do part!

©2018

We recommend that every adult should have in place an up-to-date Will and a Power of Attorney.

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