Much loved British comedian, Sir Ken Dodd, died recently but it was what he did on his deathbed that grabbed the headlines. As tributes flooded in, estate planning professionals like me were chuckling over his last minute goal against the tax man.
On trial for tax fraud in 1989 (he was acquitted), Sir Ken’s barrister, George Carman QC commented: “Some accountants are comedians, but comedians are never accountants.” Well, he may not have been an accountant, but he definitely showed he had the acumen of one by marrying his partner of 40 years, just 2 days before his death. With that singular act, he deprived the taxman of the opportunity of a large bill on his death.
In the UK, inheritance tax for unmarried couples is charged at 40% once your estate goes over the threshold of £325,000. That means that there was very much at stake for a man of Sir Ken Dodd’s success. Some estimates have mentioned a £7m fortune. That means that potentially, the inheritance tax could have been as much as £2.6million.
Sir Ken had been with his partner, Ann Jones, for 40 years but they never got married. But when it mattered the most, they took the plunge, and by that act, not only giving her the dignity of the title of Lady Dodd but also saving her a large slice of her inheritance. I do congratulate them on their success in pulling it off. However, I don’t generally recommend leaving it that late just in case fate decides to play a cruel trick and takes you just before you can say I do.
Deathbed marriages and civil partnerships are not uncommon but, as I said, I don’t recommend it as you are never completely in control of these things. If you are in a long-term relationship you should be thinking about your estate planning and looking at the inheritance tax consequences if one of you should die. It can be devastating to find that you have to pay out such a huge amount to the tax-man when you could have simply avoided it by getting married.
If you are worried about your situation, do get in touch for a no-obligation discussion to see what you can do to mitigate the situation. Marriage may well be the answer but that is a question for you.