UK: Inheritance Issues For The LGBT Community

Last Updated: 11 October 2018
Article by Erica Burt-Moore

What do LGBT families and individuals need to be aware of?

Statistics from the Office of National Statistics show that in 2017 there were 190,000 same sex families in the UK of which over half were co-habiting couples rather than spouses or civil partners. In some ways the law is still evolving to encompass the different forms of family that now exist and consequently same sex families and transgender individuals should be aware of their legal position under Wills and how they stand in relation to inheritance tax.

Same sex families who are co-habiting are faced with the same inheritance issues that affect opposite sex co-habiting families. A major consideration is that co-habiting partners do not automatically inherit assets held in their partner's sole name and it is therefore very important that a suitable Will is made to ensure the surviving partner is not disinherited and is forced to apply to the court for financial provision.

Inheritance tax

As far as inheritance tax is concerned, there are no inheritance tax concessions for co-habiting couples and so the first £325,000 (the nil rate band) of an estate will be free from tax, but anything above that will be taxed at 40%. Unlike spouses and civil partners, co-habiting partners cannot transfer their unused nil rate band between them. This means that consideration should perhaps be given to using discretionary trusts to ensure that a surviving co-habitant can still benefit from their partner's estate but the assets do not form part of their estate and so are potentially taxed twice.

For example:

Claire lives with Kate and they have a son Harry. Claire has assets of £600,000; if she leaves those assets to Kate this will incur an inheritance tax bill of £110,000. On Kate's death nine years later inheritance tax will be payable again on the same assets. Claire could consider instead leaving her assets to a discretionary trust under which both Kate and Harry could benefit. This will not reduce the tax payable on Claire's death but the assets in the trust will not be taxed on Kate's death so avoiding a double payment of tax. There is a potential charge to inheritance tax on every ten year anniversary of the trust's creation and when capital leaves the trust, but this is at a current maximum rate of 6%.

Same sex couples who are married or in a civil partnership enjoy the same inheritance rights as opposite sex spouses, including the right to inherit a certain proportion of their partner's estate if they die without making a Will, and the ability to leave assets to their spouse or civil partner free from any inheritance tax liability.

Children, guardians and same sex couples

Many people appoint guardians in their Wills to look after children aged under eighteen at the time of their death. In order to have the legal right to appoint a guardian, a person must have "parental responsibility" for the child. A child's mother (ie the individual who carried the child) will always have parental responsibility. As far as the partner who is not the legal mother is concerned, whether or not he or she has parental responsibility will depend on the marital status of the couple, and on how the child was conceived; in particular whether the child was conceived as a result of treatment in a licensed UK fertility clinic.

If one of the couple does not have parental responsibility then he or she cannot appoint a guardian for the child. If the couple wish the partner without parental responsibility to care for the child following the death of the parent with parental responsibility then he or she can appoint the partner as guardian in their Will. This will confer parental responsibility on the guardian when the Will comes into effect if the child is under eighteen at that time.


A person's domicile is vital for determining tax liabilities, succession and other rights. As a general rule a person is born with a domicile of origin which, if the child is legitimate, will depend on their father's domicile of origin. This rule causes potential difficulty when the child is legitimate but has no father, such as the child of two female parents or a child born via a surrogate with two male parents.

Transgender individuals

Since 2004 individuals have been able to apply for a gender recognition certificate which recognises their change of gender for legal purposes. Occasionally a Will might leave a gift to an individual identifying the recipient by their gender (for example, a legacy of £5000 to each of my nephews). If the Will was made before 4 April 2005 the Will is not affected by an individual acquiring a different gender, so a nephew who has acquired the female gender can still benefit from the £5000 legacy. If the Will was made after 4 April 2005 the acquisition of the new gender will affect the disposition of the estate but the court has the power on an application being made to it to alter the disposition of the estate as it sees fit, enabling the court to rectify a failed gift.

Originally published 25 September 2018

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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