Any thoughts IHT unmarried couple long term cohabitees

I act for the survivor of a couple ( the man) who assumed that as he was the older he would predecease his unmarried partner so all assets held in her name and she died first with the majority of investments and home held in her sole name- estimated estate £600000. This will give an IHT liability in excess of £100000.
I rang HMRC helpline who said no guidance was available. I suspect that as they cohabited for 52 years any financial records would no longer be available-although he can confirm that their property was purchased in her sole name with him paying his wages into her account for outgoings/mortgage payments- long since repaid.

Robert Kynan
Howlett Clarke

Good luck?

The apparent explanation for how the property came to be in her sole name does not bode well as it implies that she owns the property 100% beneficially in order to avoid IHT on his death. Whatever implied trust analysis you try to apply to the ownership, they all involve an element of intent.

Are there any children who can be given an interest in order to claim the RNRB?

Andrew Goodman
Osborne Clarke LLP

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As they were not married, the presumption of advancement does not apply.

By the client contributing to the mortgage, etc., there may be scope to argue that a constructive or resultant trust arose, thereby reducing the value of the deceased’s estate.

What was his contribution to the mortgage – did they share the repayments in an agreed ration, which could imply shared ownership despite it being in her sole name?

If the client paid all of his wages into the deceased’s account, rather than merely sufficient to meet the agreed “shared” costs, it would seem far-fetched of HMRC to assert that he had retained no rights to the funds (did he have a bank card or was he a signatory on the bank mandate?).

Paul Saunders

It may be worth running the constructuve trust argument.

we are seeing more and more cases of elderly cohabitees. Our approach now is to explain that it is our duty to consider possibilities and not just probabilities. For IHT planning we explain the benefit of marriage and also say that every year we experience one or two cases where the possible event prevails over the probable event.

The eldest couple we have had marry are 87 and 90 (last year). Around 5 years ago we have a family who came to us where the father was very seriously ill and likely to die (retired GP) with an estate of around £1m. The father and mother were divorced and have had quite a nasty divorce around 20 years ago. Mother as a nurse and had become involved in father’s care. Given the circumstances the only IHT advice we could give was for the parents to remarry - which they did - to buy time to enable some IHT shelters to be used with gifts. Not only was around £300k IHT saved, but the mother now receives a widows pension of around £13k from the NHS.

Michael McCabe,
Heath Square Private Client

The constructive Trust argument will have a better chance of success if the mortgage lender still exists & has archived evidence. I hope Shula Hebden Lloyd’s advisers will help her make a tax efficient separation decision rather than the costly, now & in future, divorce route she’s contemplating.
TDF members, who aren’t Archers fans like me, please forgive this reply. It’s bank holiday weekend & Archers Omnibus day today. We have to agree though that the Archers would make a great publicity vehicle for better understanding of this tricky topic, particularly well illustrated by McCabe 760’s clients’ story.

Gillian McClenahan

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