Journal Entries

Bon Journal

Financially single

The Sunday Times money section always carries something useful. That's the way I learn to manage my financial affairs. Last Sunday's edition (12 August) contains an article entitled "Can you afford not to get married?"

It seems that a lot of unmarried couples with children assume that they get the same treatment as married couples if one partner dies. Not so, says the article.

Emotional attachment aside, the richer partner benefits by being unmarried. The converse is also true.

Here is my summary of this article - which applies only in Great Britain.

Advantage

Disadvantage

Staying single

you can own two homes free of capital-gains tax

you keep your own assets if you split up

no requirement to pay maintenance

if you marry then divorce before retirement, you can cut the tax bill on your pension

you may be left homeless and penniless if your relationship breaks down or the other half dies

you have no rights unless you make special arrangements

when you split up, you have no automatic rights on the cohabited home unless your name is on the deeds

as with pensions, company health schemes usually do not cover the unmarried partner

Getting married

you have an automatic right to half the house

you are entitled to your spouse's company pension

you get maintenance if you split up

you can transfer assets free of tax

no inheritance-tax bill on death of the first person

you will usually qualify for cheaper insurance

if you get divorced, both people have rights over the house, regardless of the name on the deeds

you incur capital gains tax if you sell one of your homes as married couples can only own one home tax free

the tax advantage on the pension applies if only one person has a pension (and you get a divorce shortly before retirement)

15 August 2001

Summary of another article in the same issue:

what happens if you die without a will?

If you are married:

your spouse gets everything if your estate is worth less than £125K

anything above that is split between your spouse and children (if you have any).

if you don't have children, your spouse gets the first £200K. The rest is shared between your spouse and your parents.

If your parents are no longer living, the rest is shared between your spouse and your siblings.

If you don't have any children, brothers, sisters, or parents, then your spouse gets everything.

If you are not married:

your estate goes to your next of kin (who may be your children, parents, or siblings) - not the person who lives with you, no matter how committed, how close, how dependent, and how long you've lived together.

Inheritance tax is levied at a flat rate of 40% on estates worth over £242K including value of your home - but doesn't have to be paid on assets passed to your spouse.

You can make gifts of up to £3K a year to avoid inheritance tax.

Note:
The information on this web page may become out of date in the future. This is correct on 15 August 2001.