01 March, 2006
From 5 December 2005 a new law will bring in vast changes to the rights of same sex couples.
Gay or lesbian couples will be able to register "civil partnerships" (CP) and have legal recognition of their relationships. Couples who enter into CPs will gain a package of rights and responsibilities reflecting those already available to married couples. Even if you do not enter into civil partnerships, same sex couple's rights may still be affected particularly in relation to housing rights and rights to welfare benefits.
A civil partnership (CP) is a legally binding contract and to register both you and your same sex partner must sign a CP document in front of two witnesses and a CP registrar. Notice needs to be given to your local register office and the registrar must publicise your intention for 15 days before registration takes place. Once the 15 day period has ended you can register your partnership within the next 12 months.
In addition to local register offices, registration can also take place in hotels and other non religious, licensed premises. Whilst there is no legal provision for the exchange of any type of vows in the registration procedure, registrars will probably allow you to add elements to create a suitable ceremony.
Registration of a CP will automatically revoke any Will that either of you has previously made. If your civil partner dies without making a Will then you will be able to inherit from their estate.
Things to think about when making a Will include:-
Civil partners will have the same rights under tax law that married couples enjoy, the main ones being in relation to inheritance tax (IHT) and capital gains tax (CGT). Before 5 December 2005 married and unmarried couples were treated differently for tax purposes. From the start of the CP scheme, tax reliefs will apply equally to civil partners and married couples.
In the current tax year 2005/2006 the first £275,000 of chargeable gifts is free of IHT ("the Nil Rate Band").
Transfers or gifts between married couples in lifetime or on death are generally exempt from IHT without limit. On a par with married couples, civil partners will be able to make gifts to their partners with the benefit of the IHT exemption.
If civil partners make Wills leaving the whole of their estate to each other, then there would be no IHT liability on the first death, since transfers between civil partners will be exempt from IHT. However, on the second death the estate of the survivor would consist of the whole joint estate. After deduction of the survivor's Nil Rate Band (currently £275,000), the balance of the estate would be liable to IHT at 40%.
There are provisions civil partners can put in their Wills to use the nil rate band on the first death aswell as the second death, whilst still being able to benefit the survivor, which could save over £100,000 in IHT.
Only one property owned by civil partners may be treated as the main residence of either of them at any one time for CGT purposes and qualify for relief for CGT purposes. Transfer or gifts of assets between civil partners will be on a no gain/no loss basis and there will be no CGT liability.
Civil Partners will normally be accepted as each other's next of kin thus allowing you to legally register your partner's death.
Whilst not affected by the new CP regime, Powers of Attorney can be very useful.
An Enduring Power of Attorney is a document which would enable you to appoint the person or persons who you would wish to assist you with managing your financial affairs if that became necessary at a future date, for example in the event of accident or illness. You can authorise an Attorney to act on your behalf and do almost anything that you can do yourself, for example to sign cheques on your bank account and pay bills. The best time to make a Power of Attorney is while you are well enough to do so, so that it is available for use if and when needed in the future.
The authority conferred on the Attorneys is very wide, and gives them general authority to act on your behalf in relation to all your property and affairs. You can cancel or revoke the Power of Attorney at any time.
You may be able to apply for parental responsibility of your civil partner's child.
If you live in rented property you may be able to have your civil partner's tenancy transferred to your name. If your civil partner dies you may be able to take over their tenancy if it was in their sole name.
Whether or not you are civil partners, as from 5 December 2005 same sex couples who live together and are claiming benefits will be treated as a couple and no longer as two separate people. Due to the fact that your joint income and savings will be taken into account, your benefit may go down or you may not qualify at all.
Where civil partners belong to an occupational or private pension scheme which offers benefits to married partners, the pension company must also offer the same benefits to you.
Whilst we do not want to look at the end of a relationship when we have just started to think about having it legally recognised, it is worth looking at how a CP can be ended.
A CP is a legally binding agreement and if you want to end it you will need to get approval of the Court to do so. The CP can be legally ended on the grounds of an irretrievable breakdown in your relationship. When the CP ends you and your partner will have a duty to provide for each other financially and you will also have duties in certain circumstances relating to any children. The Court can make decisions about transfer of property regardless of who owned the property originally, which will depend on your circumstances and whether any children are involved.
When a CP is legally brought to an end, the civil partners should also consider the impact on their Wills.
The Civil Partnership Act is a radical piece of social policy legislation which creates an entirely new legal status for same sex relationships. It is important that you take legal advice before entering into a CP and consider carefully the legal, tax and financial implications it will have for you.
Forbes Solicitors have specialist teams who can assist you on all aspects relating to civil partnerships from registration, Wills and Inheritance tax planning, children, benefits and pensions and termination.