A growing number of over 70s could be at risk of large Inheritance Tax bills due to their lack of marital status.

It comes as research has shown that the number of over 70s choosing to live with their partner rather than marry or enter a civil partnership has surged by 288 per cent over the last 20 years.

Over the years cohabitation has increased in popularity, which is now having an impact on couples being hit with large Inheritance Tax bills and being forced to sell their home.

There has reportedly been an increase in the number of unmarried couples over 65 seeking professional advice, whose homes are subject to Inheritance Tax when one partner dies.

If one partner owns the property in their name alone, the surviving partner (if they are unmarried and not in a civil partnership) has no clear right of ownership and therefore cannot take advantage of being exempt from paying Inheritance Tax.

They would then be left to pay a potentially hefty bill, which would need to be paid within six months of the death.

As well as mourning the loss of a loved one, the surviving partner would have to quickly sell the home quickly, which comes with more stress and likely a reduced price for the property.

What action can cohabiting couples take?

To avoid this problem, cohabiting couples could ensure the home is in common ownership when they purchase it to ensure peace of mind for the future.

It is also a good idea to get professional advice for succession planning so surviving loved ones are not left with added stress and insecurity.

Inheritance Tax is something we don’t want to think about, but it is important that you understand your liabilities when the time comes. Couples should talk about their situation, so they understand potential future Inheritance Tax liabilities.

When do you have to pay IHT?

Currently, the threshold to pay Inheritance Tax is £325,000. Therefore, it will not be due if the value of the estate amounts to less than £325,000.

The standard rate for Inheritance Tax is 40 per cent, but this is only applied to the amount above the £325,000 threshold.

Another consideration is that Inheritance Tax is not due when the value of the estate exceeds £325,000 but the amount above the threshold is left to the deceased’s spouse or civil partner, a charity or a community sports club.

Find out more about Grunberg & Co’s private client and probate services here.