Q – My partner and I don’t believe in marriage. We have lived together for more than 5 years and have 2 children. Do married couples have tax advantages over non-married couples and are there any other financial benefits we are losing out on by not marrying? We don’t have a civil partnership either. Jenny – Clontarf Dublin 3
A – They say Jenny love is blind but marriage is an eye-opener ! Couples can greatly benefit financially by tying the knot or being civilly unionised in at least four ways :
- Joint assessment of your incomes – this means any unused allowances can be taken by your partner if they are on the higher rate of tax. For example, if one is earning € 24,000 and the other € 60,000, the higher tax payer will have capacity to pay additional tax on any extra earnings at the 20% margin before reaching the 40% level. As a married or civil partner, these unused credits can be switched to the other partner. As a single person or an unmarried couple, you are precluded from taking these credits.
- Inheritance – spouses / civil partners inherit all assets tax-free on the death of their partner irrespective of a valid Will or not. If two single people, even though the property might be in joint names, the tax free threshold for a non-related bequest is € 16,250 on that moiety not owned by the partner over which balance the tax payable is at 33%. That’s if the partner is sole owner and firstly has made a Will AND secondly nominated their partner for a bequest. Ironically if the non-married couple had a child and they made a Will, that child could potentially be entitled to inherit up to € 335,000 tax free from his/her parents whether they are married or not should both parents die at the same time.
- Social welfare – married or civil couples may be entitled to certain social welfare benefits or allowances not available to unmarried people in certain circumstances. E.g. you can only claim widow/widower’s allowance if you husband/wife die, the same for the widowed parent grant of € 8,000 – special funeral grants of € 850 is separate,
- Life cover, health insurance, pension entitlements on death – can all affect cost and eligibility depending on your status.
Maybe if you sort the finances out first, you will stay happier than Rodney Dangerfield who said he and his wife were happy for the first 20 years and then they met !