20.03.25

Estate Planning for childless and/or unmarried couples

There is a common misconception that there is no need for estate planning in circumstances where couples are unmarried, and/or without children. However, there are significant challenges for estate planning in terms of succession and tax benefits.

Firstly, in the absence of effective planning, your estate may not be distributed in accordance with your wishes, but rather under the rules of intestacy. These rules allocate an individual’s estate to family members in a strict order, depending on the remaining surviving relatives. In the absence of any relatives, your estate will ultimately pass to the Crown. Therefore, it is important to firstly consider who will receive your wealth upon your death (consideration could always be given to benefit charities), and then to create a valid Will to ensure your estate is distributed in accordance with your wishes.

Secondly, there are substantial tax implications for child-free couples, who are unmarried. Everyone is entitled to a tax-free amount of £325,000 (‘Nil Rate Band’).  However, there is an additional tax-free allowance of £175,000 (‘Residence Nil Rate Band’), but the conditions to claim this amount include leaving the family home, or the sale proceeds of the home to your children/and or grandchildren. The Nil Rate Band and Residence Nil Rate Band can be transferred between spouses. Consequently, spouses with children can have a combined tax-free amount of up to £1 million, whilst those without children have a combined allowance of up to £650,000. Unmarried couples are limited further to a tax-free amount of £325,000 each (or potentially £500,000 if they are leaving their residence to their children), and spouse exemption is not available.

If you would therefore like further information or advice on estate planning, please do get in touch.