Darlington-based law firm Latimer Hinks is advising its clients to check inheritance tax rules for unmarried partners following the recent news about Ken Dodd’s estate.
The comedian, who passed away last year, married his partner of 40 years two days before his death. It was recently revealed that this act resulted in his wife receiving the full £27.5million estate, and HMRC missing out on £11million in inheritance tax.
At present, the estate of an unmarried person is generally subject to a 40 per cent tax on any value in excess of £325,000, unless certain reliefs and exemptions apply, whereas when one person from a marriage or civil partnership inherits the estate of their partner, the full amount would pass to them tax free as the “spouse exemption” would apply.
Ken Dodd did not have a will at the time of his death, and had he and his partner not married, she would have faced potentially lengthy and costly legal proceedings, and she would have been forced to file a claim with the High Court.
Elizabeth Armstrong, a Director and Solicitor in the Private Client Department at Latimer Hinks, said: “It is a common misconception that unmarried or ‘common law’ couples have the same rights as married couples. At present this is not the case and unmarried partners can find themselves faced with a large inheritance tax bill, as well as a lengthy legal battle if their partner dies intestate.
“Ken Dodd’s case is particularly interesting, as the decision to get married was made days before his death, making it appear to be a deliberate move to protect his long-term partner from issues after his death.
“We would recommend that any unmarried couples contact their solicitors to discuss their rights and to plan their estates, and remind couples that if they do marry, any existing wills will become void, and will need to be updated.”