Cohabiting siblings could win same treatment as married couples
In 2018, Prime Minister Theresa May announced that heterosexual couples will be able to enter into civil partnerships, giving them substantial tax benefits. It could open the way for cohabiting siblings to also receive the same treatment, pending a proposed change in the law.
Ms May’s announcement follows a Supreme Court ruling in June this year to allow Rebecca Steinfeld and Charles Keidan to have a civil partnership instead of a marriage. Before this, only same sex couples were allowed such partnerships.
A couple in a civil partnership is entitled to the same beneficial treatment in terms of tax, pensions and inheritance as married couples. The ruling therefore aims to provide greater security for unmarried couples who have formalised their relationships, and for their families.
But some siblings who have been cohabiting for years believe they should have the same rights too.
Sister Act inclusion
Two recent cases have highlighted the issue. Both involve sisters who had lived together for over 30 and 43 years respectively.
In both cases, each sister wanted to leave her estate, including her share of the jointly-owned home, to the other. Both homes, over time, had risen substantially in value. However, on the death of the first sister, her estate will only benefit from the £325,000 tax free allowance and not any of the extra benefits that married couples and civil partnerships now receive including the extra inheritance tax allowance introduced in April 2017 in relation to the family home. This currently allows an extra £125,000 to be passed tax-free to children and grandchildren. Siblings are also excluded from the right to pass assets to each other free of inheritance tax.
This means that, in the case of these cohabiting sisters, there would be substantial extra inheritance tax to pay. In one case, the surviving sister would be forced to sell their home of 23 years.
Both sets of sisters want the law changed to give legal recognition to ‘sibling’ couples who have decided to spend their lives together, in jointly owned homes until parted by death. The Civil Partnership Act bans ‘prohibited degrees of kindred and affinity’, which includes siblings. Lord Lexden has proposed a bill to include siblings in the Act. The bill received its second reading in the House of Lords in July but has yet to reach committee stage.
So a change could be coming soon. But in the meantime, the death of a co-habiting sibling could leave the survivor with the only options of selling up, borrowing money, or using an equity release scheme.
Contact Nicole for more information.
I do, or not I do?
The Civil Partnerships, Marriages and Deaths (Registration etc) Act 2019 comes into force on 26 May 2019 allowing both same-sex and opposite-sex couples to choose either marriage or civil partnership.
It has taken well over a decade to achieve equality in this area. In December 2005 the Civil Partnership Act was implemented. This enabled same-sex partners to have their relationships officially recognised for the first time in England and Wales, affording them equivalent rights to married couples. Whilst this was a step in the right direction for equality, same-sex partners still weren’t on an equal footing as they could not marry.
The position changed when the Marriage (Same Sex Couples) Act 2013 came into force in March 2014, with the first same-sex marriages taking place on 29 March 2014. Once again this failed to level the playing field; same-sex partners had the choice of a registered civil partnership or marriage, with opposite-sex partners being unable to form a civil partnership.
Equality works both ways, and it has long been argued that to achieve this everyone should be able to formalise their relationship as they choose, either through a civil partnership or marriage. This has recently been tested in the Supreme Court which concluded that the failure to offer civil partnerships to opposite-sex couples is incompatible with articles 8 and 14 of the European Convention for the Protection of Human Rights and Fundamental Freedoms 1950. Article 8 is the right to respect for private and family life, whilst article 14 is the right to enjoy Convention rights and freedoms without discrimination on grounds such as sex and sexual orientation.
As a result of the judgement, the Government had the choice of either withdrawing civil partnerships or making them available to opposite-sex couples. They chose the latter and the Civil Partnerships, Marriages and Deaths (Registration etc) Act 2019 comes into force at the end of this month.
It’s not yet known what the take up will be for opposite-sex couples wishing to register a civil partnership, watch this space. But remember, for anyone getting married or forming a civil partnership, any existing Will you hold will be revoked unless made in contemplation of the ceremony.
Get in touch with our Wills, trusts and probate team and tick this off your to do list before you say “I do”.
Warm congratulations to all however you choose to celebrate your relationship.
To find out more, please contact Nicole.