The financial benefits of marriage – and implications for divorce

“Do you think your mother and I should have lived comfortably so long together, if ever we had been married?”
Peachum, “The Beggar’s Opera” John Gay, 1728


Marriage may seem to some to be an outdated institution, or simply not worth the expense, but the legal status of being married does have financial benefits. In a recent article in The Sunday Times, accountants Blick Rothenberg were quoted as saying “The UK tax system is designed to reward the institution of marriage.”


The beggars opera two 18th century costume 2 women kneeling men standing aroundThis also means that when you marry, your finances become more interdependent, which in turn has implications should you split up and/or divorce. 

Married, civil partners, co-habitees and common law

To be clear, the status of civil partner is all but equal to married heterosexual and same sex couples (with a couple of very niche exceptions), but co-habiting partners are not considered equal to married couples. There is no such thing as a common law husband or wife.


Financial benefits of marriage


Inheriting ISAs: As of December 3 last, Isas can now be transferred between spouses if one dies. This does not apply to co-habiting couples, and with many so-called ISA ‘millionaires’ emerging after years of hard saving, the sums involved can be quite considerable.


Inheritance tax: This is a big issue for non-married couples. If one spouse dies leaving all their assets to the other, there is no inheritance tax to pay. If your partner dies and you are not married, everything will be taxed at 40%.

Pensions and Benefits: If you have a defined benefit pension, and are married, you should receive on average half your deceased spouse’s pension. (Issues over the difference between civil partners and same sex married couples are being ironed out.) Equally, the surviving partner of a non-married couple will not be able to claim the bereavement support payment when it comes in during 2017.
If No Will is Made: Under changes announced last autumn, if you die without leaving a will, everything will go to your surviving spouse automatically. However, if you are not married and die without making a will, your children and/or other relatives will inherit, not your partner.

Why these benefits are important for divorce

At a very difficult and stressful time in your life, you need to be aware exactly what financial and tax benefits will disappear when you get divorced. Equally, you need to make sure that your divorce settlement takes these into account, especially if you have contributed to assets such as ISAs.

How LGFL can help

At LGFL, we can advise you on drawing up a financial settlement that aims to maintain your financial security despite the loss of certain marriage benefits. We offer court-based divorces, or can use our experience in mediation and collaborative law to come to arrangements outside the courts if appropriate. Call us for a free 30-minute consultation regarding your unique, personal situation.