With two Royal weddings this year, couples who are considering tying the knot need to consider their financial planning to ensure all is in order.
There are of course additional considerations for the new Duchess of Sussex due to her non UK origins, we have however put together our top ten financial tips for married couples:-
- Look at income levels – where possible make sure that each individual uses their personal allowance, basic and higher rate bands(before delving into the 45% rate)
- There is no restriction on assets being transferred between spouses. This means that you can give investments from one spouse to another to utilise lower rate tax bands
- Don’t forget capital gains tax – each individual gets an annual exemption, currently £11,700 before any tax is due on a disposal. This means that with point 2 above, where assets have a large gain, and are held/transferred to joint names there is double the amount tax free before tax is due.
- Having just got married, inheritance tax is the last thing you may think of – but we are all going to die at some point and without planning, HM Revenue and Customs could take their final cut. An exemption of £325,000 each and a further exemption of up to £125,000 (conditions apply) are available to each spouse -with any unused amount transferable on death. A review of assets should take place to ensure reliefs are maximised.
- Any Will you have automatically ceases on marriage – you therefore need to draw up a new Will in contemplation of marriage or make a new Will as soon as you have tied the knot.
- Life Assurance policies – check beneficiaries and make sure you know where the policies are kept for each of you.
- Life Assurance policies – Speak to your financial adviser about use of flexible trusts for life assurance proceeds – these could make death benefit payments quicker and more inheritance tax efficient.
- Pensions – It’s never too early to save into a pension scheme and if you can both contribute the better.
- Pensions – Don’t forget to confirm any changes to your death benefit nominations to your Pension Scheme Trustees – although payments are at the discretion of the trustees, they will normally follow your wishes.
- Finally , in what is seen as the ultimate expression of financial trust. Why not have a joint bank account. Managing your finances together is much easier and transparent than having separate bank accounts.
If you have any queries or want to discuss any points further, please do not hesitate to contact us on 0161 952 4244.