Summer of Love with 300 Weddings a Day
Delay in weddings meant missing out on £31m of rebates*
With an estimated 300* couples a day rushing to get married this summer following a year of lockdown that saw weddings either postponed or cancelled, female focused think tank WealthiHer WealthiHer is warning couples to focus on personal finances as well as the bouquet and the dress.
WealthiHer estimated that around £31m of rebates from the married persons allowance were missed due to the postponements and a potential further financial woe over a lifetime from ignoring personal finance options ahead of the day, that kick in, once married.
WealthiHer released hints and tips from its partners to help couples to take advantage of every personal finance opportunity when tying the knot.
They include:
Asset Transfer
There are many other financially attractive options which can leave them significantly better off that married couples can take advantage of but are often forgotten about, says WealthiHer, as parties become overwhelmed in arrangements for the big day. One such advantage to married life is that spouses can transfer money and assets between each other tax-free reducing their overall tax bill especially useful when it comes to inheritance or capital gains tax.
Comments Amy Pethers, Chartered MCSI, Wealth Adviser, 1762 from Brewin Dolphin
and WealthiHer Network partner:
“It is important that couples communicate about their finances before and during a marriage so that both parties feel comfortable managing their finances on their own in the event of separation or if one of the partners dies. If you die without a will and are not married, the unmarried partner may not receive anything. But if your husband or wife dies with a will, you could be entitled to some or all their estate”.
“It is common for the spouse who is less financially confident to be left unsure of how the finances are set up which can leave them feeling vulnerable at a difficult time. We would always encourage both parties to have an honest and open dialogue, adds Amy”
50/50 split?
Married couples also have more financial protection if they separate, or if one of them dies. If a married couple divorces, the starting point is an equal division of assets. But the law also looks at needs and whether one person truly needs more than the other, plus spousal maintenance can also be an option. Whereas when an unmarried couple splits, each partner keeps what is legally theirs in the first instance and it can be incredibly difficult to argue for a greater share.
If you have a joint mortgage and are not married, you don’t always automatically inherit your partner’s share of the home, whereas being married means all assets are essentially owned jointly between you, with some exceptions.
Joint vs Separate
Another important consideration when setting up home together is whether to retain separate bank accounts as well as a joint account which can take care of household expenses. For many, especially women who increasingly may be the major earner in the household, maintaining a separate account can provide an element of personal control just as a joint account brings a feeling of togetherness.
“Not sorting out personal financial matters before making a legal commitment to each other, either by marriage or a civil partnership, can have many consequences later on,” said Zahra Pabani, Partner, Irwin Mitchell LLP.
“Money worries can be one of the biggest reasons why marriages break up and couples end up in the divorce courts. It makes life together so much easier when both partners decide on basic money management and examine what can be joint finances and what should be their own personal finances”.
“Wealth protection tools such as Living Together Agreements or Pre-nuptial Agreements can really help to avoid extensive court room battles which are emotionally and financially exhausting. Much is made of celebrities signing prenuptial or postnuptial agreements which outline what will happen if they decide to split, but they are not just for the rich and famous. Although whilst these can offer protection, expert advice should be sought when drawing up any agreement.”
Pension Pots
Pensions can be a problem as many workplace, personal and private pension schemes will only pass on benefits to a surviving partner if the couple has been married. Old pension pots from past employers can carry the name of a previous partner as a beneficiary. Not making a will can leave an unmarried partner with nothing and even if they have been left assets, they face paying inheritance tax on anything over £325,000, whereas money, property and belongings left to a spouse are free from tax. An ISA allowance is another benefit that can be passed on to a spouse.
“Communication is the key to any healthy relationship and sorting out and discussing financial decisions is no exception. It is important that both partners know how best to organise their finances and work to establish common financial goals,” adds Zahra.
Children from previous relationships can be an added concern from a financial point of view, and it can be crucial to parents to ensure the family money passes down the bloodline – again a will and a wealth protection tool such as a prenup or Living Together Agreement can help and alleviate these concerns.
Zahra goes onto to say: “If the big day has to be postponed for any reason which may result in substantial additional costs as venues are rebooked and new flowers ordered, it doesn’t mean that a couple can’t get their financial affairs in order beforehand. Marriage is a big commitment, as is living together, and making sure both joint and personal finances are protected should be as much a part of the arrangements as the ceremony”.
“The key is to take advice, speak to an expert, a family lawyer can guide you through the legal maze and help signpost you in terms of what you need to do or at least think about. Go into every situation with your eyes wide open and protect yourself and your loved ones.”
The WealthiHer Network was set up in 2019 to change the approach to women by often male orientated financial institutions. It enables women to become more understood and accepted as having an important say in their own and family finances.
300 Weddings a day from research from hitched.com
*Not being able to claim a married person’s allowance, which can boost income for basic rate taxpayers by up to £250 a year***, is one of the perks available to partners who legally commit to each other. With an estimated 75,000* weddings in disarray, rising to an estimated 127,000 by the end of the tax year next on 6th April 2021, UK couples could miss out on as much as £31.75m in rebates**.
*ONS figures to Aug 14 – estimated 127,000 weddings will have been postponed to March 2021
**Gov.uk – Married couples paying basic rate can claim up to £250 in extra tax allowance, 127,000 x £250 = £31.75m. (tax allowance is calculated over year regardless of the month of marrying).
***(If one partner does not pay income tax or if their income is below their personal allowance).
Marriage Allowance lets you transfer £1,250 of your Personal Allowance to your husband, wife or civil partner. This reduces their tax by up to £250 in the tax year (6 April to 5 April the next year). To benefit as a couple, the lower earner must normally have an income below your Personal Allowance – this is usually £12,500
Disclaimers:
- The opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd.
- This information is for illustrative purposes only and is not intended as investment advice.
- The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
- Brewin Dolphin is authorised and regulated by the FCA (Financial Services Register reference number 124444)
