AXA - Be Life Confident

Around 7,000 same-sex couples have tied the knot since civil partnerships were introduced in Britain in December 2005. The number of couples saying “I do” continues to grow daily, with Will Young being the latest celebrity to admit that he would like to follow in Elton John’s footsteps and get married to his partner*.

But one British couple already faces a split after filing for divorce in May, and with the first gay divorce in Spain taking place in June, it is surely only a matter of time before the first British gay divorce is announced.

But what are the implications of divorce? Do same-sex couples have the same rights as their hetero-sexual counterparts, and should this have been taken into consideration during the decision-making process?

One such couple currently considering entering into a civil partnership are Simon (40) and Brian (48), both participants in AXA’s unique social experiment in Brighton , dubbed ‘ AXA Avenue ’. The couple have had access to independent financial adviser, Saran Allott-Davey, since November and are in the midst of weighing up the pros and cons of a civil partnership. Saran has been helping them understand the financial implications of not only of tying the knot, but also of getting divorced.

Saran Allott Davey, Independent Financial Adviser, said: “Since civil partnerships came into force last year, the financial benefits are playing an increasingly significant role in the decision-making process. There can be huge advantages, particularly relating to pension and tax savings, by entering into a civil partnership.”

"Working with Simon and Brian has been very interesting. They have been very keen to know what the financial implications of a civil partnership are, previously feeling relatively in the dark about it. Although getting divorced isn't something any couple wants to think about, we have discussed the consequences of it. As with any legal partnership, the impact of a divorce can be as significant as the marriage itself. I strongly advise all same-sex couples to seek financial advice if they are considering a legal partnership.

"Civil partnerships undoubtedly provide greater financial security for both partners. However, when the partnership comes to an end the sharing of the assets, insurances, and pensions have to be split as in the case of marriage in order to ensure the individuals have financial security out of the relationship. Financial advice is as important at this stage as it is at the outset." Saran's key points on the financial benefits of civil partnerships are:

Benefits

• Some couples claiming pensions, tax credits or welfare benefits may see their entitlements change following a civil partnership.
• Same-sex couples who live together will be treated as a couple and no longer as two single people, even if they do not register a civil partnership. Benefit entitlements will be affected because the income and savings of both partners will be taken into account when working out benefit claims.
• People who have not let the benefit and tax credit authorities know about their same-sex relationship run the risk of having to pay back money they were not entitled to at a later date.

Pensions

• Contracted out schemes: on the death of one civil partner, the surviving partner will have the same rights as a widow or widower in that they will be eligible for a survivor’s benefit
• Private pension schemes — the same benefits as those offered to spouses must be offered to civil partners in all personal and occupational pension schemes
• Death benefits — payments of death benefits to civil partners operate in the same way as payments to the survivor of a married couple

Insurance

• Each partner has unlimited insurable interest in the other, as married couples do

Inheritance tax

• Transfers between married couples during their lifetimes or on death are exempt from inheritance tax without limit
• Civil partners will be able to make gifts or bequests to their partners with the benefit of these IHT exemptions, as married couples do

Assets

• Civil partners can transfer assets to each other, such as property and company shares, without having to pay Capital Gains Tax

- Ends -

* The Sun Newspaper, New Magazine