For many older couples in the UK, saying ‘I do’ later in life, is not just about celebrating existing commitments, but locking in financial, and tax peace of mind, for the future. From April 2027, pension pots will, for the first time, fall within inheritance tax (IHT) estates. For many, this single reform has changed the landscape of later life relationships. So called ‘silver marriages’, weddings between partners in their fifties, sixties and beyond, are becoming a quietly popular estate planning strategy.
Nima Stepney and Caroline Rushton, Partners at Thackray Williams, have put together an insightful article to help explain these upcoming rules, and offer a helping hand to couples navigating love, and legacy in later life.
The Policy Backdrop
At the moment, pension savings enjoy a protected space outside the inheritance tax framework, making it easier for families to pass those funds on to future generations, but from April 2027, this approach will change. Under the rules introduced by the Chancellor in October 2024, pension funds that are not left to a spouse or civil partner, will be included as part of an estate for tax purposes. For couples who’ve worked hard to build substantial (seven figure) retirement funds, this could mean that combined assets cross into taxable territory when the first partner passes away, affecting day-to-day retirement planning. By the second death, it could also impact the legacy left behind, with the possibility of the same funds
being looked at for tax, twice. However, the full spouse exemption remains intact, providing unlimited tax-free transfers between married or civil partners.
The Rise of Later Life Marriages
Data from the Office for National Statistics reveals that ties are being cut with traditional timelines, as people choose to marry later in life. Over the last few decades, the typical age for a first-time groom has risen from 22 to 35, while for brides it’s climbed from 25 to 33. Blended families, and second chances, are also becoming the norm, with one in three weddings involving someone who’s been married before. Interestingly, later life marriages are thriving and the most common age for men remarrying, is between 60 and 69, and for women, between 50 and 54. With independent adult children, settled homes, and established savings, these couples are in a very different chapter of life. Instead of focusing on the logistics of setting up a home, they’re looking ahead and focusing on protecting the security of their retirement and organising how they’d like to pass on their legacy.
The Legal Dilemma
Tying the knot offers ways to protect your shared wealth, allowing you to transfer assets during your lifetime, and after, without inheritance tax. However, it also changes how your individual assets are viewed by the law. Should the marriage end, the courts will look at all your resources, including pensions and family legacies, with a view to sharing them equally, making early planning all the more important. Whilst thinking about a prenup or postnup might feel a little daunting, these agreements are increasingly seen as an act of sensible planning. They offer a practical way for couples to step into marriage with absolute clarity, helping to maximise tax efficiency, whilst safeguarding the financial security that has been built up over a lifetime.
Case Study: A 30-Year Partnership
Imagine a couple who have happily shared a life for decades, each bringing children from earlier relationships into their family story. Even if their wishes are perfectly aligned in their Wills, staying as cohabiting partners means they could face IHT when one passes away. With pensions being included in estates from 2027, their combined lifelong savings could cross into taxable territory, making considered and early planning more important than ever.
By contrast, marriage offers a protective shield, allowing inheritance tax to be safely deferred until the second partner passes. To make sure this transition is smooth, it’s important to remember that ‘tying the knot’ also invalidates any previous Wills. If Wills aren’t refreshed, the law would step in with a fixed formula, that splits the estate between the new spouse and any biological children, and would unintentionally,
overlook stepchildren.
Even when a new Will leaves everything to a surviving partner, it’s always a good idea to build in extra protections, so that children of the first partner to pass, feel secure and included. Sometimes these outcomes happen simply because life gets in the way. A surviving spouse might
choose a different path for their estate, or as is often the case, they might pass away without a clear Will in place. Without that guidance, the law automatically steps in to look after biological children or closer blood relatives first, which unfortunately means stepchildren aren’t included in the default safety net, unless they have been formally adopted. Navigating what happens if a surviving partner remarries, requires consideration too, as a new marriage automatically resets the legal clock, and could see the estate pass outside of the original family circle. Fortunately, Flexible Life Interest Trust Wills offer a sensible way to manage this. They allow you to be generous to your partner, ensuring they’re financially secure for as long as they live, while giving you the absolute certainty that your assets will ultimately find their way to your own children.
Balancing Risk and Reward
Silver marriages are as much about taking care of each other’s futures as they are about romance. While the tax protections can be incredibly supportive, couples are wise to consider how a marriage alters their legal landscape. By putting a clear nuptial agreement in place, and by updating Wills at the same time, you can step into this next chapter with complete confidence, safeguarding your wealth, while enjoying all the practical benefits of marriage.
If you would like further advice surrounding this article, please contact Caroline Rushton on 020 8461 6209 to discuss a prenup, postnup, and/or children matters or Nima Stepney who can assist with Wills and Inheritance Tax matters on 020 8461 6184.
Front Slider Photo by Rodri Caruso on Unsplash
Author: Helen Loder
Co-Director of Sevenoaks Mums