By Penny Bates
It is estimated that one in six couples living together are not married or in a civil partnership.
The reasons not to marry, even in long term relationships, are varied and some such decisions are positively made by the individuals concerned.
However, unmarried couples or same sex couples who have not left Wills fare little better than individuals when it comes to inheriting from their partner, and also in respect of death taxes.
The intestacy rules - what happens when someone dies without leaving a legal Will - are complicated even for married couples.
And they do not accord with how most people would like to dispose of their money and other assets.
On 1 February 2009 some of the rules that govern intestacy in England and Wales are going to change.
However this will only benefit people who are married or in civil partnerships.
The amount that will go automatically to a spouse or civil partner - known as the statutory legacy - will rise.
If the couple have children then the amount goes up from the current level of £125,000 to £250,000.
And if there are no children the legacy rises from the current level of £200,000 to £450,000.
This will be the first time these limits have been raised since 1993.
But that does not mean the couples who are married or in civil partnerships can sleep easy.
A fundamental truth about intestacy still applies to them - they will not inherit everything from their spouse or civil partner unless they have made a Will to that effect.
Unmarried couples and same sex partners
For this group of people the intestacy rules also lay down what will happen if one of the couple dies without a Will.
These rules can be a nasty shock.
If, in England and Wales, the couple have children then the estate of the deceased partner passes to the children at age 18, or earlier if they marry under that age.
If there are no children then the estate passes to the parents, siblings and other remoter relatives in a specified order.
These rules mean that if you die intestate there will be no provision made for your surviving life partner.
This contrasts with the intestacy rules for married couples and civil partners where some provision is made for the survivor.
What can be done?
The simplest step is to make a valid Will which will ensure that your assets pass to those you choose after your death.
The two Burden sisters who lost their legal campaign to avoid inheritance tax on their jointly owned home
A Will means you are also able to choose your executor i.e. the person who administrators your estate.
You can also choose guardians for any children you may have and make specific gifts of treasured items to family or friends.
It is important to remember that where the couple subsequently marry the Will is automatically revoked unless made "in consideration of marriage/civil partnership".
On death each individual is entitled to an inheritance tax (IHT) allowance, known as the nil rate band, currently of £312,000.
Any assets owned by the deceased in excess of this amount are taxed at 40%.
There is an exemption for all assets, whatever their value, passing between spouses and civil partners.
But they still need a Will to make this happen.
And this exemption does not apply at all to those in unmarried relationships, however long that relationship may have lasted.
In addition there are special rules where one partner of the marriage is not domiciled in the UK.
Bob and Jane
Let's take an example: Bob and Jane who have lived together for 20 years and have three children.
The family home is valued at £500,000, is now mortgage free, and is held solely in Bob's name.
Unfortunately Bob dies prematurely and although he has made a Will leaving all his assets to Jane, the IHT payable by Bob's executors is £75,200!
Had Bob and Jane married this IHT bill would not have existed as Bob's assets passing to Jane would have been exempt from IHT.
Many will see this as unfair but the UK tax system is geared towards favourable rules for married or civil partners rather than long term co-habitees.
In relationships outside marriage or civil partnership, it may be advantageous for the couple to hold their assets between the two of them to take advantage of each partner's IHT nil rate band.
This would give two exemptions totalling £624,000. This is known as equalising their estates.
Let's take another example; that of John and Sue.
John owns their family home valued at £300,000 and also two buy-to-let properties valued at £400,000.
Sue's assets are minimal in that she has a small savings account.
If John were to die even with a Will, leaving all the assets to Sue, the IHT bill would be £155,200!
However, John and Sue could consider possible some plans to reduce this tax.
Capital Gains Tax trap
Firstly, when purchasing the buy-to-let properties, these could have been purchased in joint names, as could their family home.
A Will can make life simpler if you are worried about your legacy
This would give each of them an estate worth £350,000, just a little above the current nil rate band for IHT of £312,000.
However, it may be that John owned the properties before he met Sue and he would then need to consider gifting half to her.
This would save IHT for the reasons given.
But it could also create a capital gains tax (CGT) bill as the gifting of the buy-to-let properties would be considered to be a disposal for CGT purposes at market value.
Tax would then be payable at 18% on the difference between the market value and what the properties cost John in the first place.
Paying CGT to save IHT may not appeal!
At the death
For some couples the IHT and CGT advantages of being married or in a civil partnership will persuade them that it is time to tie the knot.
For others who take no action there may be time towards the end of one's life to do some tax planning.
Take the situation where one partner is seriously ill.
They have fairly valuable assets between them and there will be a substantial tax bill when the terminally ill partner dies.
By marrying and then transferring all assets to the ill partner (with no tax consequences) on his death all assets would pass back to the survivor without any tax liability and with an added advantage for CGT purposes.
This is because all assets owned at death are revalued for CGT purposes meaning that any inherent gain previously accruing is "washed out".
The surviving spouse or civil partner takes over ownership of the asset at a new uplifted "cost" for CGT purposes.
There are those who, for a number of reasons, may be nervous about owning assets between them without the legal commitment attaching to marriage.
For this group of people it would be possible to take life cover to provide funds to pay any IHT that may be due on the first death.
As mentioned, many people feel the tax system is disadvantageous to unmarried but committed couples.
But with some thought and planning it is possible to reduce the likely tax burden that will arise on the first death.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.