Death Bed Marriages - Inheritance Tax
Why Are Death Bed Marriages Fashionable?
As drastic as it sounds, statistics show that more cohabiting couples are deciding to marry when one partner is literally on their deathbed. Evidence from the Home Office and the Passport Office shows a significant rise in the number of urgent marriages, often from people in health service providers.
Recent increase in the number of urgent applications for a Registrar General’s Licence
there was an 11% increase in the number of urgent applications for a Registrar General’s Licence to get married or enter a civil partnership. The marriage can then take place in any location, 24 hours a day.
This is generally motivated by the curse of Inheritance Tax. To ensure the surviving partner avoids a potential life-altering Inheritance tax bill, a last-minute marriage albeit on a partners deathbed, ensures they have a higher level of future financial support.
Ken Dodd case
A very high profile example of this was comedian Ken Dodd, who died two days after marrying his partner of 40 years on his deathbed. The estate of Mr Dodd was apparently around £7.2 million and the reported potential tax bill if he had not married before his death would have been £2.6m. This hastily arranged marriage meant the estate was exempt from the tax and everything passed to his surviving spouse.
The mainly other overlooked advantage is that the surviving spouse inherits at the probate value. This means when a major asset is sold, the Capital Gains Tax (CGT) will only apply on the increase of value from when the person actually died.
A new set of disputes
Interestingly, death bed marriages can bring about a new set of disputes. Typically this scenario involves adult children (perhaps from a different marriage) who are dissatisfied with their lack of inheritance from their parent.
An example was a case wherein the husband was diagnosed with cancer and made a Will leaving everything to his partner of 32 years. He also married his partner a few days before he died. After his death, his three daughters brought a legal challenge to the Will claiming that he was unable to understand the meaning of the Will and that he had been unduly influenced by his partner. The daughters argued about their fathers’ lack of mental capacity at the time the Will was written, but eventually, a solicitor provided evidence that the deceased had fully understood what was happening. The Court accepted the evidence, and the sisters had to withdraw their challenge.
Wills & Inheritance Tax
Of course, if there is no Will written and there are surviving children of the deceased, then the spouse or civil partner will inherit the first £250,000 and all the personal possessions. Still, the remainder is shared 50% to the spouse/civil partner and the remaining 50% divided between the children.
A death bed marriage can certainly clarify a situation and ensure a partner is duly protected after someone dies. However, a watertight Will is essential to ensure all parties about clear about the deceased intentions.
All couples should consider taking tax advice. Many unmarried couples are under the misapprehension that the ‘common-law wife or husband’ concept will provide them with the same benefits as a married couple.
Unfortunately many only discover on the passing on of their long term partner that there is no automatic right to inherit. The tax advantages suddenly become apparent, but sadly it is then too late.
Getting the right kind of advice is crucial. To obtain impartial, professional advice from an experienced professional contact us now, for the peace of mind that sound financial planning brings.