Planning for Married Couples With Estates Over the Tax-Free Allowance

If you’re married or in a civil partnership and your estate is close to or above the tax-free thresholds, having the right Will and trust structure is essential. Without it, the law decides who inherits, and your estate may face unnecessary tax and avoidable risks.

The Risks With No Will or a Basic Mirror Will

After the first partner dies, everything usually passes to the survivor. This can create several problems:

If the surviving spouse remarries

Your combined estate could pass to a new partner, leaving your children or grandchildren with nothing.

If the survivor faces debt or bankruptcy

The entire estate could be claimed by creditors.

If the survivor needs care

The full estate — including the family home — may be assessed to pay for care fees.

After the second death, more risks appear:

• Inheritance Tax on anything above the couple’s allowances‍
• Divorce children’s inheritance could be lost in a settlement
• Creditors/bankruptcy inherited assets can be claimed
• Future care costs children’s inheritance may be used to fund their care
• Generational tax assets added to children’s estates may increase their own IHT

How Trusts Inside Your Will Help

By updating your Wills and holding the family home as tenants in common, each partner can leave their share into protective trusts on first death.

This allows the surviving spouse to:

• Continue living in the home
• Move house if needed
• Still benefit from the assets

But it also ensures your share is protected for your chosen beneficiaries.

A trust can help protect against:

• Remarriage prevents your children being disinherited
• Divorce beneficiaries’ inheritance is better shielded
• Debt/bankruptcy assets are harder for creditors to claim
• Care fees trust assets are less exposed
• Future Inheritance Tax assets don’t automatically add to beneficiaries’ estates
• Loss of the Residence Nil Rate Band still available where children or grandchildren inherit

In some cases, using more than one trust gives even greater flexibility and control for each beneficiary.

This is general guidance only. Proper planning should always be based on personalised advice tailored to your circumstances