“You don’t marry someone you can live with…
You marry someone you can’t live without” – unknown
Ok so it’s not the most romantic reason for a proposal, but there are many financial and practical reasons to tie the knot. As well as the joy of sharing your life with the love of your life there are also financial benefits that include tax breaks and welfare benefits not necessarily available to cohabiting couples. Below are just some of the financial reasons to say “I do”.
Favourable Tax
Married couples can choose how they want to be taxed – joint assessment, separate assessment, or single assessment whichever produces the most favourable tax advantages given your personal circumstances. You can share tax credits if one person earns less than the other. You can be taxed as one unit and allowed some tax concessions not used by one spouse to be transferred to the other. The standard tax cut-off point is €51,000 for a married couple (€42,000 if you’re single/co-habiting). If both partners are working you can earn up to €84,000. This means that one person can have a cut-off point of up to €51,000 and the other person can have a cut-off point of up to €33,000.
The increase in the standard rate band is not transferable between spouses, so the tax bands for 2024 would be:
- €51,000 @ 20% (= €10,200) and €4,000 @ 40% (= €1,600) for the first spouse
- €33,000 @ 20% (= €6,600) and €2,000 @ 40% (= €800) for the second spouse
Spouse has more rights when it comes to inheritance
Spouses’ don’t pay inheritance tax.
When a spouse dies, irrespective of a will or the deceased person’s wishes their spouse has a legal right to one-third of their estate. However the same can’t be said for co-habiting couples. Co-habiting couples have no automatic rights to a share in their partner’s estate. They must be named specifically in a will to inherit and may be liable for inheritance tax. A co-habiting partner is treated as a stranger for inheritance tax purposes and is liable for 33% tax on any inheritance over €16,250.00.
The payout from a life assurance policy to yourself or your spouse is tax-free, provided you or your spouse were the original beneficial owners.
Spouses can gift each other money with limited tax consequences. If you are married you can transfer gains between spouses and offset the losses of one against the profit of the other. This is not applicable to cohabiting couples.
Pension Benefits
Pension benefits can be transferred to spouses. If a person dies before retiring, their spouse is entitled to death-in-service benefits from the pension pot. If the spouse has already retired then a pension can be paid to the survivor depending on the particular scheme. Make sure you speak to your financial adviser. When it comes to pensions, those who are not married or in a civil partnership cannot guarantee access to their other half’s pension savings.
No Stamp Duty for Married Couples
Married couples don’t have to pay stamp duty when they transfer assets from one to another. They are not subject to capital gains tax either.
Self-employed – tax savings if you employ your spouse
If you are self-employed or run your own business you can reduce your tax bill by employing your spouse and share tax credits. If the company funds a pension for you and your spouse it can result in significant income tax savings for you and the company.
Capital losses made by one spouse can be used by the other spouse to reduce a capital gains tax bill.
Life is full of surprises and things can change in a heartbeat. The key is to anticipate those bumps in the road & be prepared for them. It is so important to discuss your finances with your partner & make important decisions together. Don’t wait until there is an issue to be addressed talk to us t put a plan in place, it doesn’t have to be elaborate, that way neither party is in the dark should something happen.
Don’t be left thinking… if only…
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