Whilst the average age to be married in the UK passed 35 for the first time in early 2018, from a parent’s perspective a beloved child will always be the most worthy recipient of advice and guidance. Following the announcement the betrothed will be caught up in unending ‘wedmin’ and many couples prefer to plan the big day themselves, but with marriage being so much more than celebrations on the day, parents can play a vital role by having one eye on the future. Marriage changes the legal and financial status of a person, and having an overview of the significant issues that arise when a couple tie the knot can be an important gift that a parent can give their child.
We hold relationships with specialists across a wide range of disciplines in order to provide clients with a truly holistic service. In this article, we are pleased to introduce Patricia Milner, Private Client and Tax Partner at Withers LLP, to explore this topic further by looking at the key tax and legal areas to consider upon your child’s engagement.
Prior to getting married, you should encourage your child to think about their Will. This is particularly important if they already have a Will in place, as an existing Will will be revoked on marriage (unless it was made in contemplation of the marriage). Even if they do not have a Will in place, for many people, engagement signifies the next step in a relationship and your child will likely therefore want to ensure that their future spouse will inherit some or all of their estate. We can advise on a range of succession planning options, ensuring that your child has thought about and provided for all eventualities. It may not, for instance, be suitable for your child’s fiancé to inherit everything outright. Instead, it may be wiser for them to only inherit part of the estate, or to only have a right to the income ensuring that the remainder of the estate is kept for the benefit of any children.
You may also wish to revisit your Will to ensure that it adequately provides for future grandchildren and is sufficiently flexible to reflect your family’s ever changing circumstances.
It is important to ensure that sufficient life cover and critical illness cover is in place to meet liabilities and in trust so it is paid outside of the estate of either or both.
Expressions of wish for existing cover, including death in service benefits and pensions should also be reviewed.
Pre-nuptial agreements are no longer the preserve of the rich and famous and we are finding more and more that couples have already discussed the basic outline of an agreement, before they get engaged. Pre-nuptial agreements can be very helpful where either party has inherited or is likely to inherit wealth or has amassed business assets or where there are trust interests. Often parents are keen for a pre-nuptial agreement to be put in place so that their own succession choices are transparent and ring-fenced. If your child has decided to get a pre-nup, then it’s a good idea to address the agreement earlier rather than later and have it concluded and put away in a drawer months before the big day. Independent legal advice is required on both sides and it is wise to look for a lawyer who has strong experience of nuptial agreements and a pragmatic but sensitive approach to the negotiations. We adopt a collaborative approach wherever possible where a couple and their lawyers work together to create a document that reflects their current situations as well as aspirations for the future.
With weddings becoming increasingly expensive, you may wish to help out the lucky couple to make sure they have the wedding of their dreams. The good news is that each parent of both the bride and groom can give a gift of up to £5,000 made in contemplation of marriage free of inheritance tax. This means that if you die within seven years of making the gift, it will not be taken into account for inheritance tax purposes. Grandparents can gift up to £2,500 each and anyone else may gift up to £1,000.
In addition to the £5,000 it is useful to remember that you also have an inheritance tax annual exemption of £3,000. You could therefore make a one off gift of £5,000 in contemplation of the marriage, plus additional gifts of £3,000 each in the year of the engagement, with no inheritance tax consequences.
Your child is about to embark on a lifelong path that will be full of ups, and maybe a few downs, but by having an awareness of the important legal ramifications of marriage, you can play a role in ensuring that both your child and your future grandchildren are looked after and have access to the right advice to help them on each step of their journey.
Patricia focuses on wills, tax, trust and estate planning for both UK and non-UK resident and domiciled individuals and their families. Patricia has significant experience in advising family businesses and landed estates on succession and capital tax issues.
She also advises on governance issues as well as succession and education matters for families.
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