Should Sister Be Allowed To Form A Civil Partnership Together? Strictly For Financial Reasons One Understands.

[anotheoldgit]

http://www.dailymail.co.uk/debate/article-3230075/TOM-UTLEY-sisters-lived-30-years-allowed-tie-knot.html

[bednobs]

i don't really understand his point - why can't the sisters own it jointly, so that if one dies it immediately passes to the other one? Doesn't that avoid IHT issues?

[ummmm]

Yes.

[mikey4444]

All the sisters need do is to write their Wills...storm in a tea cup here as far as I can see.

[naomi24]

It's not just a matter of writing wills. Civil partners have rights to insurances, pensions, etc., as well as property. Yes, people who share their lives and their homes, be it siblings or friends, should be able to enter into civil partnerships.

[woofgang]

I agree and have continually said so. Legal and financial partnership benefits should be available to any two people who choose to do so. Its easy for unrelated couples of the same gender, they can just enter a into civil partnership, two people of different genders can marry, its relatives who lose out.

[Baldric]

\\\All the sisters need do is to write their Wills\\\

///But if one of my sisters were to die the other would be saddled with a bill for inheritance tax of something of the order of £130,000///

[Mamyalynne]

Yes, as eloquently outlined by others above.

[ladyalex]

I agree too....having watched an aunt lose out on pensions after having lived all her life with her brother...and taken care of him.

[mikey4444]

I am not quite sure here but can't sisters or brothers form Civil Partnerships already ?

[woofgang]

not with a sibling Mikey, the rules for forming a civil partnership are the same as those for marriage.

[Baldric]

From the LINK

////Of all the injustices in this wicked world, the law that stops my sisters from forming a civil partnership is perhaps not the most grievous///.

[mikey4444]

Thanks Woofy...I wasn't sure.

[Barmaid]

No, they should not be able to form a civil partnership. A civil partnership is for same sex partners who are not within prohibited degrees of relationships (eg siblings). The example given is for siblings – however, I can see other cases where a civil partnership would not be permitted – grandparent and grandchild, aunt and nephew, etc. I can see what the author is trying to achieve, but he has not thought this through. A Civil Partnership is not the answer. A change to the IHT laws is needed to assist those who have spent many years living together and where each depends on the other’s co-ownership of a property for their home. It doesn’t matter whether the co-habitee inherits through survivorship or through a Will – the outcome is the same inasmuch as once the nil rate band threshold for IHT is reached IHT is payable at 40%. Spouses and civil partners have the benefit of inheriting tax free and on the death of the survivor the beneficiaries have the benefit of a combined nil rate band (ie the combined value of two nil rate bands). Siblings in this situation don’t.

I would suggest a fairer tax regime where those who do depend on a close relative for their home and with whom they have cohabited have some tax concessions.

[naomi24]

Barmaid, but it's not just a matter of property and inheritance tax. As I said earlier, it's pensions and insurances too.

[Barmaid]

Pensions and insurances can far easier be put into trust. If the settlor survives 7 years, there is no IHT because they are a potentially exempt transfer. The property you live in cannot be put into trust and escape IHT because it breaches the reservation of benefits rules.

[naomi24]

Barmaid, As far as I'm aware upon death, if there is no surviving legal partner, pensions cease to be paid. That needs to change to give people sharing their lives the same rights as those married or in civil partnerships.

[woofgang]

yes, my late DH's pension, which had been part of his salary package, could only be passed to his spouse or civil partner.

[woofgang]

why change the tax laws when you can just extend the people who are allowed to enter into a civil partnership? I am sure there are people (a minority) who do it now for the benefits and not because they are in a "relationship"

[naomi24]

Exactly. The simplest solution.

[Barmaid]

I accept that some pension companies will only pay the income to a surviving spouse or civil partner. But many more will continue to pay to a "Dependent" (I have just, in fact secured such a payment for a client with one simple letter). Income from a pension is not going to have any sort of IHT implications - lump sum payments will. This is why they can easily be written into trust. In any event the recent pension changes gives people flexibility to withdraw pensions and invest elsewhere. If someone is living with a sibling/friend/other relative, they have the ability to choose a pension which will protect that relative on death. They have no choice about an IHT bill.

The point the article was making was about co-habitee siblings having to pay a whopping IHT bill and as a consequence losing their home when they are, to all intents and purposes dependent on each other for their home.

I would think that the way of dealing with it would be on the same lines as Business Property Relief or Agricultural Property Relief - perhaps "Shared Property Relief".