The decision not to get married is, for some people, just as obvious as the decision to get married. As of 2022, around 49% of 18–34-year-olds wanted to get married, which means that a significant portion of the population has no intention of marrying in the near future. 

We’ve been offering financial advice to clients in Bristol and beyond for many years now, and understand that the decision not to get married can mean just as much to some people as the opposite. We know what to look out for – what bumps in the road to anticipate – and how to strengthen your finances in order to meet your goals together, without exposing yourselves to unnecessary risks. 

Here are three concerns you should be addressing… 

  1. Inheritance Tax Planning 

Planning for the impact inheritance tax (IHT) will have on an estate is important for anybody. All too often, families are unexpectedly hit by a higher IHT payment than they anticipated, and that can cause a lot of unnecessary worry, disruption, and delays to them getting what they need to keep the mortgage paid, the lights on, and life operating as usual. 

But things are even more complicated for couples who are not legally married or in a civil partnership. This is primarily due to the fact that, without that marriage certificate, spousal exemption is not on the table. 

Spousal exemption is a real lifeline for a lot of people. It means that, for the most part, any of the deceased person’s estate that is transferred to their spouse or civil partner will not be subject to inheritance tax. 

Spouses can also ‘share’ their nil rate band. So, if the entire estate was passed solely onto a spouse – which would mean that none of the deceased’s nil rate band was used – the surviving spouse would be able to pass on the estate to beneficiaries with a higher tax-free allowance (their nil rate band, plus the percentage of their late spouse’s nil rate band that was unused). 

As you can see, there are a lot of benefits available to married couples that simply aren’t available to unmarried couples, no matter how long they’ve been together. That’s not to say that unmarried couples need to accept a dauntingly high IHT payment – there are plenty of ways to make your estate as tax-efficient as possible – but that it’s a little more complex.

At Perennial Wealth, we are used to taking a more nuanced approach to inheritance tax planning in cases like these and can help you to ensure that your loved ones are protected against inheritance tax as much as possible. 

  1. Retirement Planning

It’s never too early to start planning for your retirement. The sooner you can get those wheels in motion, the simpler everything will be as you begin to approach that next milestone. And, with the age of retirement climbing higher still, optimising your finances to ensure you are ready and prepared to meet your own goals – rather than being at the mercy of whatever the state pension age is when you’re ready to slow things down – is key. 

Again, however, this can be more complicated if you’re an unmarried couple. Spousal and survivor benefits from the State Pension are not available to partners who are not legally married or in a civil partnership. The same goes for many private pensions – while spouses have a right to receive survivor benefits from their late partner’s pension, unmarried partners do not have those same protections. 

You will also need to consider how you will approach pension sharing and splitting if you do decide to part ways in the future. This brings us on to our third consideration…

  1. Co-Ownership of Assets 

From property to savings accounts, it’s common for committed, unmarried couples to share as many assets with one another as married couples but, again, this can lead to some additional complications that legal spouses wouldn’t need to contend with. 

As we mentioned above, pensions are a key example of the lack of framework for long-term partners looking to ensure their partners will be protected in the future. But, in addition to those risks, you also need to consider the fact that accumulating your pensions together leaves you both vulnerable to a lack of legal protections when it comes to splitting that money if you do separate. Married couples have a solid legal framework around them; unmarried couples do not. 

This extends to a long list of assets. While it’s easier not to think about that ‘worst case scenario’ when you’re excited about opening a joint account, merging your savings (and, potentially, your debts), and purchasing property together, every step closer together should prompt you to pause, get some sound financial advice, and agree on what will happen if the relationship doesn’t work out. 

While things are more complicated for unmarried couples, that’s no reason to get married. There are always ways to increase your protections, make concrete and mutually beneficial (and fair) plans for the future, and weatherproof your estates without tying the knot. Working with a financial advisor over the long term is a great way to keep things ticking over, and to avoid any unwanted worries from eating away at you late at night.  

Please note: Inheritance tax planning, will writing, estate planning and trusts are not regulated by the Financial Conduct Authority (FCA)