We know this is a sensitive topic. We also know many people believe that a long partnership gives the same protections as marriage. That is not the case.
In the UK the rules mean a surviving partner may not inherit automatically and estates above the nil-rate band can face a 40% charge on value above that threshold. This can hit twice: on first death and again later, unless steps are taken.
Our aim is simple. We want the survivor to stay secure at home while making sure your children get what you intend. We will explain common traps, such as assuming a partner inherits like a spouse and relying on “common-law” myths.
Throughout we will set out clear tools — wills, ownership choices, allowances, gifts, trusts and insurance — and show how they work in real family situations. For practical starters see our guide on IHT tips for unmarried couples and a concise explainer at what to know if not married.
Key Takeaways
- Marriage brings exemptions missing for many long-term partners.
- There is a real risk of a double 40% charge unless steps are taken.
- Simple tools — wills and ownership choice — can protect both partner and children.
- Trusts and properly placed policies can ring-fence assets.
- Get practical, UK-focused advice early to avoid common pitfalls.
Why inheritance tax planning matters for unmarried couples with children in the UK
Cohabiting families are rising. The ONS reports that the number of people living together doubled to 3.3 million between 1997 and 2017. Yet laws around death still treat married and civil partnership households very differently.
At death, IHT applies at a 40% rate on the value above the nil rate band (currently £325,000). The residence nil-rate band (RNRB) can add up to £175,000 when a home passes to direct descendants.
Marriage and civil partnership bring special reliefs: spouses can transfer unused nil rate and RNRB between them. Cohabiting partners cannot. That difference often creates a double‑tax risk.
“If everything passes to the surviving partner, the estate may face IHT on the first death and again on the second.”
- Double-tax risk: assets moved to a partner on first death can be taxed again later.
- RNRB taper: the residence allowance begins to reduce once an estate exceeds £2 million.
- What you can control: how you own your home and what your wills say affects whether children benefit from the RNRB.
We outline practical steps next. For contrast on how married spouses are treated, see our note on UK inheritance tax rules for married.
Get the foundations right: wills, intestacy rules and guardianship planning
Getting the basics right now saves grief and legal trouble later. An absent will hands decisions to fixed laws. That is seldom what a family wants.
Why intestacy is dangerous. Under intestacy rules an unmarried cohabiting partner can be left with nothing. Your estate can pass to blood relatives instead of the person who shared your life. This is the nightmare scenario we want to help you avoid.
Writing wills that do two jobs
A well-drafted will protects the surviving partner and rings‑fence what your children should receive. You can use trusts to control timing and protection rather than giving assets outright.
Letter of wishes and guardianship
A letter of wishes is a private note that guides executors and trustees about your intentions. It helps reduce disputes and explains sentimental choices. Guardianship directions ensure care arrangements are clear if kids are young.
- Explain who should care for minors.
- Consider life interest trusts so a partner can stay at home.
- Use a letter of wishes to record why decisions were made.
Later-life and blended relationships
Blended family situations need frank talks. Adult children and new partners may have different expectations. Honest conversations now cut costly fights later. For a practical guide on marital rules and differences see our note on married couple rules.
| Issue | Risk | Practical step |
|---|---|---|
| Intestacy | Partner left out | Make a clear will |
| Young children | Care uncertainty | Name guardians and trust funds |
| Blended family | Conflicting expectations | Use trusts and letters of wishes |
Ownership and allowances: use the nil rate band and residence nil rate band effectively
How you own your home can change who inherits and which allowances apply. We recommend checking title now. Small steps here help protect value and security.
Check title: joint tenants or tenants in common?
Joint tenants pass automatically to the survivor. Tenants in common let your share pass under a will. Choose the form that matches your wishes.
Why unused allowances can be wasted
You cannot transfer an unused nil rate band or residence nil rate band to a partner unless you are married or in a civil partnership. That makes allowance use harder for many households.
Equalisation, CGT and stamp duty risks
Transferring assets to equalise estates can let you use two rate band allowances over time. Be honest about costs: transfers between partners can trigger capital gains tax and may attract stamp duty land tax where mortgages exist.
Practical pointers to protect occupancy and RNRB
- Consider life interest trusts to protect the survivor’s home use.
- Aim to keep combined estate value below £2,000,000 to preserve the residence nil rate band.
- Seek tailored advice where there are mortgages, second properties or large unrealised capital gains.
| Issue | Impact on value | Typical remedy | Points to check |
|---|---|---|---|
| Joint ownership | Automatic transfer may waste partner’s own allowances | Change ownership type or use trusts | Title, mortgage terms, wishes |
| Unequal assets | Single estate uses only one set of allowances | Lifetime equalisation or trusts | CGT, stamp duty, funding |
| Large estate > £2m | RNRB tapers away | Reduce estate value where possible | Review second homes, value timing |
Reduce the taxable estate in life: gifts, surplus income and other exemptions
Using lifetime gifts carefully is a straightforward way to protect what matters to your family.
Start with the everyday allowances. You can give up to £3,000 each tax year and carry any unused amount forward one year. Small gifts of up to £250 per person are allowed too, if no other exemption applies.
Potentially exempt transfers and the seven-year clock
Large gifts usually count as potentially exempt transfers (PETs). Make the gift and the seven-year clock starts. If you survive seven years, the gift falls outside the estate.
“Gifts made 3–7 years before death may get taper relief, reducing the IHT due over time.”
Regular gifts from surplus income
Regular payments from surplus income can be fully exempt if they are consistent, come from income not capital, and do not reduce your standard of living. Keep clear bank records and a written note explaining the payments.
Property, reservations and charitable giving
Beware the gift with reservation. If you give a home but still live there rent-free, HMRC may treat it as part of your estate.
Charitable gifts are exempt. If at least 10% of the net estate goes to charity, the rate on the rest can fall from 40% to 36% — a useful tool for many families.
- Practical tip: plan gifts in stages to avoid harming your retirement income.
- Record all gifts and reasons. Executors will thank you later.
Use trusts and insurance to protect children’s inheritance and the survivor’s home
Trusts and insurance are the practical bridge between a surviving partner’s security and your children’s long‑term share.
Nil‑rate band discretionary trusts placed in a will can hold the nil‑rate band on first death. The survivor can benefit from income or capital while the assets do not form part of their estate. That helps reduce exposure across two deaths and may keep the second estate below the RNRB taper point.
Life interest trusts for occupation and control
Life interest trusts let someone live in the home or receive income during their lifetime. You control who receives the capital later. This protects occupancy without enlarging the survivor’s later estate.
Life insurance to meet an IHT bill
Life insurance can fund any bill on first death. Writing the policy in trust keeps the payout outside the estate and speeds access to cash.
“A policy in trust is often the simplest way to give executors the money they need, fast.”
Business assets and CGT issues
Business Relief needs continuous qualifying ownership. A surviving cohabiting partner must often hold business assets for a further two years to get relief on a later death.
Also, transfers between partners can trigger capital gains tax because there is no automatic no loss/no gain treatment. Get accountancy advice before moving valuable assets.
Who should you call?
- Solicitor: draft wills and trusts.
- Accountant: check CGT and business asset rules.
- Financial adviser: arrange life insurance and premium trust placement.
We recommend forming a short team early. That small step can save time, cost and worry later.
Conclusion
A clear, simple plan today can stop costly problems later and keep your family secure.
Big takeaway: long-term partners do not get the same automatic protections as married people. That means wills, ownership choices and timely action matter more to protect a partner and young family.
Our three priorities remain the same: keep the survivor secure, protect the children’s share, and reduce unnecessary IHT at the 40% rate where possible.
Practical order: make wills and name guardians, check property title, use allowances and measured gifts, then consider trusts and life insurance.
Leaving everything to the survivor can be costly. Regular reviews help—update wills after key life events and track asset values.
If you need tailored help on property, blended families or large pensions, seek advice and see our tax and estate guide and the couple inheritance guide.