Silver Marriages: When Love Meets the Taxman

The Policy Backdrop

Currently, pensions sit outside the IHT net, allowing families to pass them down untaxed through generations. From April 2027, that shelter disappears.

Under rules announced by Chancellor Rachel Reeves in October 2024, the value of pension funds not inherited by a spouse or civil partner will count toward a person’s taxable estate after death. Families with seven-figure retirement funds may suddenly find themselves within scope of IHT.

However, the full spouse exemption remains intact — providing unlimited tax-free transfers between married or civil partners.

Rumours surrounding the 2026 Budget point to further tightening: capping the 25 per cent tax-free lump sum or cutting higher-rate pension relief. These changes are likely to accelerate the move towards formalising relationships among affluent retirees.

The Rise of Later-Life Marriages

The Office for National Statistics shows that Britons are marrying later than ever. In 1970, the average groom was 22.8 years old; by 2020, 35.3. For women, the median age rose from 25.1 to 33.2. One in three marriages now involves someone previously married. Among men remarrying in 2022, the most common age bracket was 60–69; for women, 50–54.

Many of these couples already own property outright, have grown-up children and accumulated savings or investments. They are less focused on setting up home than on protecting wealth and controlling succession.

The Legal Dilemma

Marriage offers clear tax benefits. Transfers between spouses will remain IHT-free, and any unused nil-rate bands can be transferred to the survivor. But it also opens the door to claims under the Matrimonial Causes Act; in divorce, the courts start from a 50:50 division of all assets, including pensions and inherited wealth.

This makes nuptial agreements an increasingly important part of late-life financial planning. Once dismissed as unromantic, prenups and postnups now provide the structure couples need to balance tax efficiency with asset protection.

Since the Supreme Court’s decision in Radmacher v Granatino (2010), English courts have shown willingness to uphold such agreements if they are entered into freely and fairly. The trend continued in MN v AN [2023] EWHC 613 (Fam), where a wife’s attempt to challenge a prenup was rejected.

Case Study: A 30-Year Partnership

Consider a couple who have lived together for decades, each with children from earlier marriages. Without marrying, they would each face IHT on the other’s death, even if wills are aligned. With pensions added to their estates in 2027, their combined assets would exceed £1 million — pushing them firmly into the taxable bracket.

Marriage, by contrast, would defer the IHT liability until the second death, potentially saving hundreds of thousands of pounds. But unless they update their wills, the act of marriage itself revokes any previous testamentary dispositions — potentially leaving the estate to fall under intestacy, which splits the estate between the spouse and their blood children in fixed shares, potentially disinheriting stepchildren. Even if a new Will leaves the entire estate passing to the surviving spouse, it still creates the potential for the deceased partner’s children to be disinherited (known as sideways disinheritance).

This could be done deliberately by the surviving spouse, if they chose to leave their stepchildren out of their Will. It could also happen accidentally, if the second partner also died without making a Will; intestacy laws would mean their estate passing to their children in the first instance – which would not include the stepchildren, unless they had formally adopted them (which is less likely with adult children) – or other relatives, if they have no children of their own.

Things could become even more complicated if the surviving spouse were to remarry, and either chose to leave their estate to their new spouse, or fail to make a new Will, in which case the new spouse would automatically inherit the estate.

Flexible life interest trust wills can mitigate this: they allow the survivor to use and enjoy assets for life while safeguarding capital for the first spouse’s children and lineal descendants.

Balancing Risk and Reward

Silver marriages are as much about prudence as passion. They can deliver immediate IHT savings, but couples must weigh those against the risk of divorce or later-life disputes. A properly drafted nuptial agreement, drawn up alongside updated wills, offers the best of both worlds — tax efficiency and asset protection.

For advisers, the message is clear: the intersection of pensions, tax reform and family law will drive significant change in the next two years. Whether out of affection or fiscal sense, the wedding bells among Britain’s retirees are likely to keep ringing.

How our Private Client and Family teams can assist you

Our experienced Private Client and Family solicitors based in Bromley, Sevenoaks, Kent and West Wickham can assist with any concerns you may have about the the upcoming changes to pension pot taxation.  If you are looking for IHT advice please contact Nima or Caroline on 020 8290 0440.