Three Common Misunderstandings In Relation To Inheritance Under English Law

• Published date: 07 July 2023
• Subject Matter: Tax, Family and Matrimonial, Inheritance Tax, Wills/ Intestacy/ Estate Planning
• Law Firm: Thomson Snell & Passmore
• Author: Ms Una Angus

Losing a loved one is always a very difficult time. Unfortunately, it can be made even more challenging if the friends and family of the deceased subsequently discover that their loved one's assets won't pass on as they presumed.

We often come across people who have misconceptions about how inheritance works under English law. Here, we set the record straight on the three most common inheritance 'myths'.

1. There is no such thing as a common law marriage

Many cohabiting couples are under the misconception that the rules which apply to married couples also apply them as the so-called "common law spouse" - a term which, although often bandied about, has no legal meaning.

If an individual dies without having a valid Will in place, his or her estate will be distributed in accordance with the intestacy rules which do not provide for the survivor of a cohabiting couple. Instead, the deceased's children will inherit at 18; if there are no surviving children, the deceased's parents will inherit or, if they have also died, the deceased's siblings.

Unmarried couples do not have the same inheritance tax (IHT) benefits as their married counterparts. Assets passing between spouses are exempt from IHT ("the spouse exemption"). Every individual has an IHT allowance of '325,000 ("the nil rate band") and, if certain criteria are met, an additional IHT allowance of '175,000 ("the residence nil rate band"). When a married individual dies, his or her unused IHT allowances pass to the surviving spouse. When an individual in an unmarried couple dies, there is no spouse exemption and the nil rate band and, if available, the residence nil rate band are not transferrable to his or her surviving partner. Instead, the deceased's available IHT allowances are applied to the value of his or her estate and if the value exceeds these, the excess will be taxed at 40%.

2. Getting married revokes your existing will

Many individuals are not aware that a will is ordinarily revoked by subsequent marriage.

Take, for example, the fictitious couple Jack and Jill who are in their late 50s and are cohabiting. Jill has an adult daughter from a previous relationship. Jack and Jill are living in a property inherited by Jill from her deceased parents. The property is owned solely by Jill. Jack and Jill have valid Wills in place leaving their estates to the survivor of them outright on the first death.

Jack and Jill subsequently marry without putting new wills in place. Jill sadly dies and her estate...