Advice on tax treatment of civil partners from Coll & Co

UNMARRIED COUPLES. YOU COULD HAVE A LARGE TAX BILL IF YOUR PARTNER DIES.

Since November 2015, the tax treatment of Civil Partners and married couples are identical. The same cannot however be said for co-habiting couples even if they have been living together for years and have children.

WHAT HAPPENS IF I INHERIT THE FAMILY HOME IF MY PARTNER DIES?

Partners in co-habiting couples are treated like strangers for inheritance tax purposes. For example if you inherit your share of the family home valued at €316,250 then the most you can receive tax free is €16,250 leaving you with a tax bill of €100,000. Married couples pay no tax on all assets either gifted or transferred between them.

ARE THERE ANY RELIEFS AVAILABLE IN THE ABOVE CASE?

You may qualify for what is called the ‘Dwelling House Exemption’ but there are certain conditions you need to ensure you satisfy first.

WHAT OTHER OPTIONS DO I HAVE?

You could consider splitting your share of the house in your Will between your Partner and children where the reliefs are much higher i.e. €320,000 per child. Alternatively, you could take out a specific type of life cover that will pay out a lump sum on death that will cover the tax bill arising.

ARE THERE ANY OTHER FINANCIAL CONSEQUENCES OF BEING UNMARRIED?

Pensions are always an area to consider particularly if your partner is in a defined benefit scheme. Most pension schemes only allow for a Spouse’s pension, so if unmarried and upon the death of your partner in retirement, the payment ceases.

CONCLUSION

Unmarried couples (if not intending to marry ) should plan carefully so that a death does not lead to large tax or financial consequences. If you would like our assistance in understanding the options available, please contact us to arrange an appointment.

Coll & Co. provide hourly consultations. If you are concerned that this may apply to you please contact us and arrange a consultation.

The above information should be treated as a guide only.

Please call the office to arrange an appointment 091 592080 or email [email protected]

Advertisement

 

Page generated in 0.0833 seconds.