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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4188
Experience:  FCCA FCMA CGMA ACIS
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A couple have been together for around 15 years. They have

Customer Question

A couple have been together for around 15 years.
They have never married or made a will.
They have two children 15 and 8.
The man has worked as a contractor for 10 years billing via his own company. She acted as company secretary.
He took a salary from the company.
She took the joint, excess funds and invested in bank accounts that paid good interest rates on behalf of the family.
She has died suddenly.
The funds in her bank accounts have been included in her estate.
There are bank transaction showing how the money went from the company to her.
She has not worked and been a full time mum and could never have amassed this money herself.
Is it possible for him to make a case to HMRC that the money in her accounts was joint money and should not all be included in her estate?
If so, who in HMRC should he contact?
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

Firstly, Inheritance Tax (IT) only kicks in on estates over 325K. If the deceased's estate is below that figure then there are no IT matters to consider and that matter is effectively closed. As an Australian might say, 'No worries!'

The inclusion in the estate is a matter which the executor of the deceased's will, or the administrator if they died intestate, will have to consider. However, here is the view of Hanne and Co, Solicitors:

'The intestacy rules were originally introduced almost 90 years ago yet still dictate what happens if you die without a valid Will. These rules do not recognise the person you call your ‘partner’; it is only a ‘spouse’ who will automatically inherit (your personal chattels, a lump sum of the first £250,000 of the estate and a life interest in half of the remaining estate; if there are children they will receive the remaining half. If there are no children then your spouse would receive £450,000 with the remainder shared with your parents or siblings depending on the circumstances).

The Law Commission looked into the situation of cohabitees and back in 2011 recommended that certain unmarried partners who have lived together for five years should have the right to inherit on each other’s death under the intestacy rules. Where the couple have a child together, this entitlement would accrue after two years’ cohabitation, provided the child was living with the couple when the deceased died.

In March 2013 the Government announced that these recommendations would not be implemented in this current Parliament.
The recommendations for changes to the intestacy provisions are being considered but only for spouses; the proposed reforms would:

Ensure that where a couple are married or in a civil partnership, assets pass on intestacy to the surviving spouse in all cases where there are no children or other descendants;

Simplify the sharing of assets on intestacy where the deceased was survived by a spouse and children or other descendants;

With unmarried partners still excluded the rules look set to remain antiquated and will not achieve what the deceased perhaps would have wanted and expected for their partner.'

The news is not good as the matter has not received Parliamentary time; the 'common law' partner could be entitled to receive nothing from the deceased's estate. This is, however, a highly complex area of family law and the remaining partner should seek trusted, local legal advice with a view to approaching the Probate Court to set aside the intestacy rules in their favour. I warn you now this might not be successful particularly if opposed by possible beneficiaries and under the rules this list is long and complicated. Where children are involved it becomes even more problematical and they may well have a better claim than the remaining partner.

Sorry to have to rain on your parade. The remaining partner might be on a hiding to nothing. Get him to a well practiced fsmily solicitor without delay.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 3 years ago.
Thank you for your support.