Are you really married? Why it matters for your estate planning

For estate planning purposes, marriage presents a host of favourable legal rights and tax advantages. But to derive the benefits available to married couples in England and Wales, the marriage itself must be recognised by law.

Most couples would never even think to question whether they are legally married. Such a discovery would normally come to light following the breakdown of a relationship or the death of a partner, presenting potentially significant financial consequences at what is already an emotionally distressing time.

What counts as a legal marriage?

Not every ceremony results in a legally recognised marriage. The law distinguishes between valid marriages that comply with the relevant legal requirements, and the following categories:

• Void marriages – marriages where the parties have gone through what would otherwise be a valid marriage process, but a legal barrier prevents the union, such as where one party is already married.
• Voidable marriages – marriages that are legally valid unless they are annulled by the court for reasons set out in legislation.
• Non-qualifying ceremonies – ceremonies that do not create a legal marriage at all because the necessary legal formalities were not met.

It is this final category that often catches couples by surprise, as they may have considered themselves as having been married for years without the union ever having been recognised in law.

Overseas marriages: Usually recognised, but not always

One such example of an unrecognised union arises where a marriage takes place overseas.

As a general rule, the validity of an overseas marriage is determined by the law of the country in which it was celebrated. If a marriage is legally valid under local law, it will usually be recognised in England and Wales. However, where local legal requirements have not been followed, a couple may return to England believing that they are married when, legally speaking, they are not.

A high-profile example is the marriage ceremony of Sir Mick Jagger and Jerry Hall in Bali. Despite their lavish wedding ceremony, it later emerged that the marriage had not complied with the necessary legal requirements under Indonesian law and was, in fact, not recognised as a valid marriage in England.

The lesson is simple: it is compliance with the relevant legal requirements – not the celebration itself – that determines whether a marriage is recognised by law.

Religious-only ceremonies

The same principle applies to religious-only ceremonies.

A Nikah, the Islamic marriage ceremony, is an important religious and cultural commitment. However, as with overseas marriages, the question is not whether the ceremony is meaningful or valid from a religious perspective, but whether the relevant legal requirements have been satisfied.

When conducted in England and Wales, a Nikah will not usually create a legally recognised marriage unless accompanied by a civil ceremony. In such a situation, the Nikah will be treated as a non-qualifying ceremony, meaning that the couple are regarded in law as cohabitants, rather than spouses.

The same principle will apply to a Nikah conducted overseas. If the legal requirements of the relevant jurisdiction are not satisfied, the marriage will not be recognised in England and Wales.

By contrast, a Nikah may be recognised where:

• it is accompanied by the necessary civil marriage formalities in England and Wales (for example, where the ceremony takes place in an authorised venue and complies with the relevant legal requirements); or
• it takes place overseas and creates a legally valid marriage under the law of that jurisdiction.

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Estate planning consequences

The consequences of an unrecognised marriage can be significant from an estate planning perspective.

1. Inheritance Tax

The key, and most valuable, relief available for married couples and civil partners is the spousal exemption from Inheritance Tax. Broadly speaking, assets pass to the surviving spouse or civil partner free of Inheritance Tax, enabling wealth to pass efficiently between them on death.

If, however, that marriage is not legally recognised, this relief will not be available. Assets will be treated in the same way as any other gift and may become exposed to Inheritance Tax at 40%.

For families who have planned their affairs on the assumption that the spousal exemption will apply, the result can be a significant and unexpected tax bill.

2. Intestacy

Issues can also arise where someone dies without making a valid will.

Under the intestacy rules, spouses and civil partners have automatic rights to inherit from an estate. Unmarried partners do not, irrespective of the length of the relationship or the life that they had built together.

A surviving partner who believed that they were married may therefore discover, at an already difficult time, that they have no automatic entitlement to inherit from the estate. What they assumed would pass to them as a spouse may instead pass to other relatives under the intestacy rules, potentially leading to dispute and additional expense.

What should you do?

While reform to the law in this area remains under consideration, the current rules continue to apply. Taking advice before your wedding can help avoid unintended tax and inheritance consequences, whilst ensuring that your affairs are structured in line with your wishes. Given that marriage generally revokes an existing will unless it is made in contemplation of that marriage, it is important to review and update your will as part of your wedding preparations.

If you would like advice on your estate planning arrangements, please contact one our team of succession planning experts.