When preparing articles for our website, we often provide brief updates on recent case law and changes in legislation. Both the academic and practical application of the law is something our team enjoys and discusses, using it to provide solutions for individuals often in difficult situations. What we rarely do however, is discuss the wider societal implications of the rules which we apply.
The inheritance tax system is a fitting example. Each individual is afforded a sum of money which can pass free of inheritance tax. This is known as the Nil Rate Band and is currently £325,000. When an individual leaves their assets to a spouse on death, their estate is exempt from inheritance tax. This means their Nil Rate Band is unused and as such can be claimed on the death of the second spouse. A couple married or in a civil partnership therefore has £650,000 which can pass free of inheritance tax. A tax advantage not afforded to cohabitees.
Where an individual leaves their home to direct lineal descendants (children, grandchildren etc.) they can benefit from the Residence Nil Rate Band. This additional allowance enables a further sum (up to £175,000) to pass free of inheritance tax to the next generation and is also transferable between spouses. A tax advantage solely for those with lineal descendants (although the legislation does include stepchildren in the definition of lineal descendants).
At face value the inheritance tax system is not misogynistic. Both genders benefit from the same rules whether married or in a civil partnership. There are also practical reasons which favour the rules as they stand. For instance, if inheritance tax was payable when assets passed between spouses on death (rather than being spouse exempt) individual’s might have to sell their matrimonial home or use their retirement savings in order to pay the tax due. I do not think anybody wants to see a widow or widower in that position. If a spouse has received their husband or wife’s estate, the assets are bunched together and as so, it makes sense that their estate benefit from the tax advantages afforded to two people. Other jurisdictions have however, recognised “de facto marriage” providing cohabitees with a similar level of security to those who are married. Is that something the UK also needs to recognise?
Jurisprudence, or the philosophy of law, is a wide and complicated area dealing with the theory behind our legal system. Feminist legal theorists argue that the legal system is rooted in women’s historical subordination. It could be argued that the Residence Nil Rate Band is an example of this – after all, it provides a tax advantage to having children which statistically disadvantages women financially. Where a woman is married in a heterosexual relationship, she is statistically more likely to be the primary care giver to any children.
As such, she is more likely to take time out from her career. At the other end of the scale, married men are more likely to earn more than married women (and statistically everyone else). Does a tax system which favours marriage therefore favour men? Is it arguable, that the support of marriage and children within the legal system is inherently prejudicial to women?
Other theorists advocate that the law should be used to better the morality of society and consider the support of marriage and children to provide the best foundation for this. The commitment of marriage is a union widely celebrated for religious and many other reasons. It is not a relationship most would consider prejudicial to a woman. Many social scientists also support the law’s commitment to married couples. Statistically children are more likely to be financially disadvantaged when born from single parent families. Studies have found that married couples are more likely to have a stable relationship when compared with cohabitees. Is it therefore right that the tax system supports marriage? Is it misogynistic to do so? Regardless of the camp which you find yourself in, it is an interesting topic to explore.
Our job as Solicitors is not to pass judgement on any person’s views or circumstances but rather to untangle, explain and apply the legal rules that govern us. This article therefore raises more questions than it answers. It is certainly not possible to discuss in any detail all of the legal theory involved in a short website article. Given the recent questions raised in connection to misogyny in our society, I find myself reflecting on legal theories and wondering whether such conversations should be more actively debated. So my final questions for you, should we be having these wider conversations about our legal framework? And as professionals familiar with the rules in place, should we be encouraging those conversations?
Hay and Kilner’s Private Client Team provide advice and guidance in connection to all aspects of Wills, Inheritance Tax, Estate Administration and Tax Planning. If you have further questions about this article please contact the private client team on 0191 2328345.