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FDR Law Legal Clinic - Estate Planning for Co-Habiting Siblings

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Legal advice from Ian Sydenham, Partner at FDR Law specialising in Wills, Trusts and Probates

Q: What estate planning advice can you give to co-habiting siblings?

A: The media recently highlighted the case of the Burden sisters who live in a house they jointly own after inheriting it from their parents.

Neither of the sisters are married, though one sister does have a grown up daughter who doesn’t live with them.

As they have grown older, each has become concerned about what would happen to the other sister when one of them dies.

Allowances apply on the death of a husband, wife or civil partner but not for couples living together who are blood related.

Under current tax rules, on the death of one sister, her share of the property would be included in her estate and potentially be taxed.  Depending on the overall value of the estate this could mean a large inheritance tax bill.  In the worst case the surviving sister might need to sell the house to pay the tax.

The Burden sisters have been long standing campaigners for a change in the tax laws to allow for the inheritance tax bill to be deferred in cases like theirs until after both their deaths.  However, there is currently no indication that any such change will be made.

In the meantime, co-habiting friends or relations would be well advised to ensure that they have Wills in place and to consider their options for minimising or paying the Inheritance Tax due on either death.

To discuss Wills, Trusts or Probates contact Ian Sydenham on 01925 230000 or email ian.sydenham@fdrlaw.co.uk