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The inheritance tax burden and civil partnerships for cohabiting siblings: right idea, wrong approach?

Date:24 OCT 2018
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Family Law in Partnership director David Allison and associate Carla Ditz re-examine how and why civil partnerships came into being, the successful campaign to allow heterosexual couples to enter into a civil partnership and the proposals for ‘committed siblings’ to be able to form civil partnerships. 
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Let’s turn back the clock. It’s December 2005 and the first civil partnership between a same-sex couple in England and Wales has taken place following the enactment of the Civil Partnerships Act 2004. What flowed next was, for many, a long-awaited opportunity to formalise their relationships with their (often, long term) partners and to align legal rights with those of married couples including in respect of inheritance tax relief.

The introduction of civil partnerships then culminated in a change in the law which took place in 2014 to allow same sex couples to marry (or convert their existing civil partnerships into marriage) following the enactment of the Marriage (Same Sex Couples) Act 2013. This however then sparked debate as to whether opposite-sex couples were, as a result, being unfairly discriminated against (insofar as same sex couples have the choice of either civil partnership or marriage whereas opposite sex couples can only marry). With a ruling by the Supreme Court in 2018 that the law has in fact been discriminatory, Theresa May’s government is finally taking steps to action a change in legislation to allow opposite-sex couples to enter into a civil partnership.

Why civil partnerships?

The notion of a civil union or civil partnership is certainly not a new one. The first civil unions were formed in Denmark in 1989 and the ideology and enactment of legislation then spread to many other jurisdictions globally. What this tells us is that the idea of civil partnerships has really existed as an alternative to marriage for some time. In other words, allowing a couple in a loving relationship to formalise that relationship, for it to be acknowledged in law and therefore affording the couple certain legal rights as a result of this committed relationship. A civil partnership (at least in the UK) is a status akin to marriage and no other kind of relationship.

Theresa May’s government has of late been under pressure to finally introduce civil partnerships for opposite-sex couples following the success of Rebecca Steinfeld and Charles Keidan in the Supreme Court in June 2018. By a unanimous vote, the five judges of the Supreme Court ruled that the Government’s refusal to allow opposite-sex couples to enter into a civil partnership ‘incompatible’ with human rights law.  Many couples are hoping to ‘save the date’ following the announcement by the government to allow them to enter into a civil partnership in the not too distant future. For Rebecca Steinfeld and Charles Keidan, they feel a civil partnership “captures the essence of our relationship and values. For us, a civil partnership best reflects who we are, how we see our relationship and our role as parents – a partnership of equals. We want a civil partnership to cement our commitment and strengthen the security of our family unit.” They are not alone. Many couples reject marriage as they feel is it unduly patriarchal and has religious connotations which are not necessarily representative of a couple’s beliefs. Whilst this was not the initial motivation for introducing civil partnerships in England and Wales to same-sex couples, the idea of a real alternative to marriage with the same legal rights is attractive to many.

Civil Partnerships for siblings? 

In October 2018, Conservative MP Sir Edward Leigh asked: “Why should siblings who’ve lived together for years have to pay estate duty when one dies?” Online, he tweeted, “Mixed-sex civil partnerships to be legalised. Why not for siblings too?”

This comment has come in light of Lord Lexden’s Private Members’ Bill, “The Civil Partnership Act (Sibling Couples) Bill” which received its second reading in the House of Lords in July 2017. The Bill seeks to amend the Civil Partnership Act 2004 to include sibling couples. The requirements would be that both parties are over 30 and have lived together for a continuous period of 12 years.

The argument goes that there must be an injustice where siblings who have lived together for a significant period of time suffer financial hardship as a result of inheritance tax laws when one party dies and, for example, they jointly owned the property they lived in. It is entirely understandable that such siblings would want to reduce their tax burden. This does not however imply that they wish to enter into a civil partnership, which is legally akin to marriage. This does not sit well and represents an over complication of what should be a straightforward situation.

Further, by allowing sibling couples to enter into a civil partnership, this might undermine the significance or raison d’être of such a union. What many siblings who live together are concerned about is a level of tax they will have to pay on the death of their sibling. In all the circumstances, it is not an unreasonable ask to alleviate that burden. However, what this calls for is a change to tax law not a sibling marriage or civil partnership. This would be an unusual step in circumstances where siblings (and indeed more distant relatives) are currently prohibited from marrying or forming a civil partnership. It remains to be seen how Lord Lexden’s Bill will progress as legislation is introduced to accommodate civil partnerships for opposite-sex couples.

Once again, family lawyers cry out for a change in the law for cohabitants who are neither married nor in civil partnerships to offer protection when a relationship breaks down or when one cohabitant passes away. Some of these people are the most vulnerable and need legal protection. No scheme that requires registration or ‘opt in’ will provide protection.  They need a scheme that applies unless they specifically ‘opt out’.

David Allison is a director at Family Law in Partnership. He acts for a wide range of individuals including business owners, entrepreneurs, bankers, other lawyers and their partners. The focus of his practice is financial claims on divorce, particularly those with an international dimension, but he is also well known for his expertise in the legal issues affecting cohabitants, same sex couples and civil partners. David can be reached via dna@flip.co.uk.

Carla Ditz is an associate at Family Law in Partnership. She advises on all aspects of divorce, children and cohabitation matters. Carla also has a keen interest in religious divorce, in particular the Jewish Get, and advises clients on what steps need to be taken and at what stage during the civil divorce process. Carla can be contacted via cd@flip.co.uk.

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