Currently, in England and Wales only those who are married or civil partners do not have any inheritance tax to pay on assets left to them by their spouse.
Any other class of people who live together do not enjoy the same inheritance rights and can potentially see an inheritance tax bill of 40% of anything over the £325,000 nil rate band threshold.
Proposed IHT Changes
Following the case of Catherine and Virginia Utley, where two sisters who have lived together for over 30 years were facing an inheritance tax bill of £140,000, the House of Lords have proposed to extend the inheritance tax exemption to siblings over the age of 30 years old who live together and have been for at least 7 years prior to the date of the first death.
Will these changes be automatically applied to a Will?
These proposed changes are certainly positive for those effected, but we at Cunningtons would advise not to rely on this as a reason for not having your Will drafted, as depending on how you and your sibling own the property your share may not automatically pass to them upon your death.
It is, therefore, increasingly important that your Will is drafted by a qualified solicitor.