The Civil Partnership Act and Estate planning for same-sex couples

As part of Smith Partnership’s support of LGBTQ+ History Month, we will be looking back at key moments in legal history which have advanced LGBTQ+ rights. Here, we will be looking at the effect of the Civil Partnership Act 2004 and its importance to same-sex couples for estate planning purposes. 

The Civil Partnership Act came into effect on the 5th of December 2005 and enabled same-sex couples to register as civil partners and enjoy similar legal and financial protections as marriage (which wasn’t available to same-sex couples at the time). 

When it comes to estate planning, marriage provides many tax advantages which can be utilised by couples when dealing with the distribution of their estates. Prior to the Civil Partnership Act, same-sex couples were barred from such benefits. 

Here are just four of the ways in which the Civil Partnership Act has changed this position for the better for same-sex couples:

1. Gifts to a civil partner are not subject to Capital Gains Tax

Capital Gains Tax is payable on any transfers of assets which have increased in value during a person’s ownership. Prior to the Civil Partnership Act coming into effect, all gifts between same-sex couples would have been taken into account for Capital Gains Tax purposes. For example, if a person purchased a painting in 1995 for £5,000 but then in 2000 the painting was worth £50,000, Capital Gains Tax would be payable if the person wished to gift this painting to their same-sex partner in the year 2000. 

However, following on from the Civil Partnership Act, any transfers between civil partners became exempt for Capital Gains Tax purposes. Gifting between couples is often an effective tool when considering estate planning options.

2. Protection for Civil Partners where one has passed away without a Will

Where a person passes away and does not leave a Will, their assets are distributed in accordance with the Intestacy Rules. These statutory rules set out who is entitled to deal with a deceased’s estate and who is entitled to benefit from the same. 

Prior to the Civil Partnership Act coming into force, if a member of a same-sex couple passed away without a Will, their estate would not pass to the surviving partner. Instead, it would be distributed between the deceased’s relatives. 

The Civil Partnership Act amends this position by giving civil partners the same rights as married couples under the Intestacy Rules. Since this time, whenever a civil partner passes away without a Will, the surviving civil partner will inherit all (or a portion of) the deceased�