Inheritance and the family home

The sisters first began their long fight in 1976 and they have consistently appealed for cohabiting couples to benefit from the same exemption from IHT of gifts between, originally, married couples and latterly, civil partners who now enjoy the same rights.

 

They believe that it is unfair that while sharing the same family home in Marlborough, Wiltshire, the surviving sister may be forced to sell the £875,000 property to meet the IHT due on the deceased sister’s share of their joint assets.

But in Strasbourg the European Court of Human Rights ruled by 15-2 that under Articles of the Human Rights Convention, they have not been discriminated against.

 

All co-habiting couples, whether they be siblings, heterosexual or gay couples who are neither married nor civil partners, face the same problem as Joyce and Sybil.

 

The 2008 Finance Act has provided that the Nil Rate Band for IHT (currently £312,000) is now transferable between married or civil partners. Consequently when one such partner dies leaving everything to their surviving partner, which is an exempt transfer, then their Nil Rate Band is not lost.

The new relief allows the surviving partner’s estate to benefit. When that partner dies then the available Nil Rate Band can be double that of the single rate.

 

This transferable Nil Rate Band, though useful, still does not negate the need for effective IHT planning and all couples should take advice on their estates and make tax efficient wills.

 

However, for a large section of the married population the news is a welcome saving from IHT.

 

Nothing has changed for co-habiting couples and, while house prices may be stabilising or even falling, for the average couple the joint asset of their home can still put their combined estate within the IHT net.

 

For these couples, especially those with children, the burden of raising IHT on that first death can be difficult and, like Joyce and Sybil, force a sale of the family home. The IHT attributed to the family home can be paid in ten annual instalments while the home remains unsold but, nevertheless, instalments to a family can still be a financial burden.

Careful IHT planning can be the key to minimise the impact and starting early

(Joyce and Sybil were over 60 when they began their fight), is the key.

 

A tax efficient will and considered lifetime gifts as well as insurance can all ease the IHT burden.

Those who do not want to or cannot legally marry should ensure they protect their partner and children effectively.