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Gay unions ease life insurance issues

Date: Wed, 23 Nov 2005

The new civil partnership act, which will come into force on December 5th, is likely to ease life insurance issues for gay couples.

The Act will create a new legal relationship of civil partnership, which two people of the same-sex can form by signing a registration document. The union means that the couple will be entitled to the same treatment as opposite-sex couples who enter into a civil marriage, including equitable treatment for the purposes of life insurance and pension rights.

It is hoped that the new law will help ease the growing number of family disputes over a partner's right to claim life insurance and avoid inheritance tax.

However, a gap in the legislation could mean that heterosexual friends will be able to receive all the benefits as well – especially as the union does not require consummation.

"Unlike a marriage, a civil partnership cannot be made void if it is not consummated," said Mark Giddens, tax adviser at national accountancy group UHY Hacker Young.

"Friends who register as civil partners could pass their estates to one another free of inheritance tax and could also benefit from a deceased partner's pension rights."

It is expected that eventually the Inland Revenue will be granted powers to investigate the legitimacy of such partnerships.


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