Treat us like lesbians, say sisters in UK tax fight

[T_i_B]

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/09/13/nsisters13.xml

Inheritance tax concessions discriminate against some heterosexual couples, lawyers for two elderly sisters told the European Court of Human Rights yesterday. Joyce Burden, 88, and her sister Sybil, 81, claim that they should enjoy the same tax advantages as a lesbian couple.

The sisters looked after their parents and two aunts at their home near Marlborough, Wilts, until their deaths. They now care for each other. But when one of the sisters dies, the other will face a hefty bill for inheritance tax.

They fear that the home they inherited from their parents will then have to be sold. Inheritance tax is not payable on property passing on death from one spouse to another.

When the Civil Partnership Act came into force last year, that exemption was extended to same-sex couples. But siblings and descendants are not allowed to register as civil partners, and so are not eligible for the tax advantage.

[BeautifulLoser]

1. That sucks

Hope they win

[davidinalameda]

4. why?

why didn't they challenge the law before the civil unions went into effect

I hope they lose

[Alameda]

5. domestic partnership

That's interesting. Why do you hope they loose? As I see it, it should all be domestic partnerships (who are closest to one another) and who sleeps and has sexual relations with who should be left out of equation completely.

[davidinalameda]

10. domestic partnerships are supposed to be in lieu of marriage

to say that these sisters who have chosen not to get married and to live together denigrates gays and lesbians

what's next-two roommates?

[Xithras]

13. Anyone should be able to register a domestic partnership.

Here's a question for you: When a lesbian couple gets older and stops having sex, should their partnership be revoked? How do you differentiate between two nonsexual heterosexual female friends who want to marry, and two nonsexual lesbian female friends who want to marry? People marry for convenience ALL THE TIME, in situations where love and sex aren't really even part of the discussion. In areas where domestic partnerships are permitted, even gays and lesbians sometimes join simply for convenience to ensure legal oversight by a particular person when needed. The question is this: Name one valid, nondiscriminatory reason why these rights shouldn't be afforded to everyone who wants them? The legal union of two people should NOT be predicated on their wanting to have sex with each other.

[davidinalameda]

17. should anyone be able to get married?

should a man be able to marry his sister in order to get benefits?

[politicat]

22. Under united states tax code, adult, cohabitating siblings won't be

subject to such taxation.

I hope the sisters win. All people who choose to share their lives and fortunes should be able to set up domestic corporations that grant them the benefits of inheritance.

[davidinalameda]

23. what is a domestic corporation?

you're reducing the coupling of two people in love to basic economics?

[Xithras]

24. Love is not the concern of the state.

Personally, I'm in favor of getting government out of marriage completely. The government should offer domestic unions...a legal joining of incomes and assetts...and nothing more. If you want to get MARRIED, go to a church.

Besides, many people get married for reasons totally unrelated to love. Economics, benefits, and child rearing are often bigger factors than attraction. Growing up, I had two neighbors who were married and NEVER loved each other. They came from a very religious small town where marriage was simply expected. They vaguely knew each other, and when they both hit their mid-twenties and were still unmarried, they married each other to end the harping from their friends and families.

They'd been married for decades, had two kids together, but made no secret of the fact that they really weren't more than friends. They didn't even sleep in the same bedroom.

Is it in the states interest to keep people like THEM from marrying?

[politicat]

27. Absolutely. That is what marriage is.

It's not about love - love doesn't need marriage. Marriage is a financial and social partnership that provides legal remedy for progeny and offers legal security and economic benefits to each partner that cohabitation does not. It conveys rights of survivorship, medical and legal privilege and legal protection in cases of death or other damage that strict cohabitation does not. Sorry if you don't like the fact that I'm very hard-headed and logical about this, but in law, we cannot define love. We can define financial, social, legal and taxation rights and responsibilities and since marriage is a legal status, we must define marriage in terms that can be defined legally.

I absolutely believe that any group of people who are capable of giving consent, regardless of sex, number or relationship (though not age - marriage is an adult's privilege and responsibility; it should not be thrust upon a child who cannot make such legal and economic decisions in other matters), should be able to benefit from the voluntary economic partnerships that are conveyed by the status of marriage. Don't get me wrong - I'm an ardent and strident supporter of same-sex marriage; however, I'm also a supporter of communal family groups that may not conform to the new social concept of nuclear family. Throughout most of history, people have lived in communal groups, not in dyads with a single set of common children.

Love is great... but the piece of paper that my late (American term: girlfriend; legal term: domestic partner; my term: wife) and I had from the Netherlands did not change our love. Nor does the piece of paper that my present husband and I have. (I'm a monogamous bisexual.) We loved each other before and after we got our legal documents that ensured that I could inherit their properties in the cases of their deaths, that I could make their end-of-life medical decisions for them, that I could sign consent for medical procedures when they were incapacitated.

The major difference in my two marriages: marriage to my husband took 20 minutes and $15 for the license. The subequivalent to marriage to my late partner took more than six months, well over $4000 in legal fees, and was not complete when she died, so I was not able to make the decisions she wanted me to make. (Fortunately, her father, a very kind, accepting and gentle man who was her next of kin, didn't violate her end-of-life wishes and was amenable to a property settlement that was acceptable to both of us.)

My late partner and I still didn't get the tax benefits of marriage; she could not deduct my tuition payments from her taxes, for example, and only could have claimed me as her dependent after we had lived together for an entire calendar year. Compare this to my husband and I, who, though we married at the end of December, were able to file taxes for the entire tax year as MFJ and he has never had to claim me as a dependent.

Love is delightful, but the money and the legal issues are at least as important, if not more so in terms of how real people live.

[Xithras]

25. Yes.

As I stated elsewhere, I don't support state marriages anyway, but since you asked, I do believe that siblings should be able to marry.

Keep in mind that "marriage" does NOT equal sex. It's an economic partnership. The love part shouldn't be a factor in the writing of domestic law.

[happyslug]

47. It is all that Dame Theodora's fault

If she had NOT convinced her husband to permit Love to replace dowry as the basis of marriage, Marriage would still be a simple contract of the wife's family giving the Husband their daughter AND her money (If the husband rejected the wife at any time the wife AND money had to be returned to her family).

Marriage has evolved over the last 100,000 years of Modern Humans existence. It seems to have started as the exchange of women between clans, united the clans into larger groups. This evolved into the concept of two people becoming one, with BOTH bringing with them the support of their extended families (and the property and membership of that extended family). It is only with industrialization and urbanization that the main thrust of Marriage becomes the modern Nuclear family (and the nuclear family only replaced the Extended Family with the adoption of the modern Welfare State). The bi change occured do to Theodora's influence on her husband on the above question (And other improvements in the Rights of Women).

For more on Theodora (d 548 AD).
http://www.roman-emperors.org/dora.htm

[qwertyMike]

39. Why Not? n/t

[qwertyMike]

40. I (male) shared a house with a guy

For over 3 yrs because we were both divorced and had our children (infants) visiting weekends, summers etc. It was a 4-bdrm suburban home, all we could afford.

We are both hetero.

Does it mean that if I stuck my thing up his thing we should have been awarded homosexual rights?

Probably, but it didn't happen

Mike

PS: We live in Canada - civilization

[toopers]

64. How do you know they chose not to get married . . .

how many people did they turn down?

[dsc]

37. actually they did

they intervied the older sister on NPR this week and they challenged the law back before civil unions and lost now they are trying again.

[Kagemusha]

2. ...Well, I doubt no one warned this would be one outcome

Unmarried young men registering as gay people when they're straight is another one that people harp on for abuse of such laws. Then again it's not like they have standards for who gets married either except paying the proper fee, since it's practically an end in itself for some people.

[SandyPond]

11. I hadn't considered that as a possibility.

I guess that it didn't even occur to me that one would "abuse" such a law. But now that you have brought it to mind it brings forth all sorts of was to beat the system.

[heliarc]

20. Male and female roommates

have been applying for common law marriages that were platonic since it became legal too... Helps with the taxes and if you've been living together long enough I think there are arguments that community is served by the support you offer each other. Why discriminate?

[Ravenseye]

26. It's different

I don't know how I can describe it but....well it's different.

I think that if two people are dedicating their lives to each other, whether they're straight, gay, or 90 year old sisters, it's ok, as long as it's legally tying the two people together in all the ways' marriage does today with rights of inheritance, medical, and divorce.

Just platonic roomates though who might not be living together next year? I have a big problem with that. I can only identify one specific reason. I'm a small business owner and providing health care is expensive. I'm willing to provide coverage for people who are married or in a civil union, but just roommate? I'm not paying for the healthcare of your roommate just because he doesn't have any and you're getting slick with the legal code. Sorry. If you're a family, then that's fine, but if you're just some schmoe who rooms with my employee....nuh uh. I'm not paying for him.

[heliarc]

29. Uh...

In most states you can't be common law married until you've lived together for a while.

Well, sorry, but this has been protected for asexual couples who've lived with each other for long periods of time for years. If its protected for Heterosexual couple, why not everyone else? I'm a small business owner too and I have the same problems you do with covering married people who I don't see as committed to each other in one way or another, but I do not judge love or Family. Family is more broadly defined than that. Do you oppose providing social services for Foster parents? Some of them are getting slick with the law too? Someone might need more health care protection if they choose to adopt? Are you going to restrict them as well just because their child-rearing is "just adoption"? If two people decide to let each other into their lives (for whatever reason) maybe its just none of my business, and the law should reflect that too. If you want people to be able to divorce after a year of marriage than heterosexual people can "get slick" with the legal code too. You can't deny that the current marriage code isn't starkly discriminatory. So get rid of the marriage laws all together than if they HAVE to be unfair. But don't argue in favor of discrimination. Heterosexuals should not be the only one's who get a free lunch.

And frankly, providing health care for every citizen shouldn't be seen as our burden as small business owners anyway. That is an aberration of the current trend of right wing policies (HMOs/Pharmco). Universal health care is where my tax dollars should be going IMHO, and I don't care if my tax dollars go to treating any schmoe on the street. All "schmoes" deserve health care as a service of the common welfare. I'd much prefer that my tax dollars be spent on innoculating/caring for/curing/healing the "scmoes" you'd discriminate on, than on killing Iraqis. Health care for everyone seems like the cluster bomb we should drop over the civilian populace... It might hit someone we didn't intend it to, but how could that hurt anyone, as long as there is some strategic thought put into it?

[KittyWampus]

53. In cases of 'abuse' where roommates are just trying to get tax breaks

I would suggest that in order to get the tax breaks two people should sign a civil union contract.

And while two people who are NOT committed to a lifelong relationship may take advantage... they do so at their own peril.

If their civil union "partner" ends up racking up credit card bills or hospital debts, then BOTH people will be legally liable.

[damntexdem]

3. But that would put the EU on the slippery slope to ...

giving tax breaks for incest. ;-)

(Just trying to anticipate Frist's objections.)

[Thickasabrick]

7. Next it will be giving tax breaks to people and their pets

(Just trying to anticipate Santorum's objections)

[happyslug]

6. Wait to this argument hits the US.

First remember, the LEGAL rationale being used to require States to treat Homosexual couples like heterosexual married couples is equal protection of the laws. i.e. The state can NOT treat two people in the same circumstances under the law. The issue is when is the state treating people differently? First the Federal Court have always held the Equal Protection Clause does NOT cover economic differences (leading to the famous observation that it is equal protection of the laws to forbid both the poor and rich to sleep under bridges, knowing full while only the poor are force to sleep under bridges do to economics while the rich can afford someplace better).

As I said, the Equal Protection Clause does NOT cover economics. Thus what does it cover? The intention was to force the South after the Civil War to treat the recently freed slaves the same as whites. Thus the STATES could not write laws that were aimed at blacks but not whites. Now the south used Separate but Equal for over 50 years to get around this requirements but finally in 1954 the US Supreme Court ruled it was a violation of the Equal Protection Clause of the Constitution to Separate Blacks from whites by law. The courts then took this argument that the States could NOT forbid blacks and whites from marrying. Then took it to prohibit ANY disparateness in treating two people in similar circumstances (Except if the difference is based on Income).

Now Europe is NOT using the Court system and any clause in their Constitutions like the Equal Protection Clause to permit gay-marriage, Europe is granting such marriages by STATURES i.e. the various Parliaments are passing LAWS to permit such marriages. That is NOT happening in the US, the thrust for gay-marriage is through the courts and the Equal Protection Clause NOT through the States Legislatures. The reason for this seems to be more to do with the much more frequent elections in the US compared to Europe, the Parliamentary system that REQUIRES a majority to maintain any Government and the separation of powers in the US (Europe believes in Parliament supremacy).

Any back to the Equal Protection Clause. This is the main thrust for Gay-marriage in the US, a legal Argument that the States can NOT discriminate against tow similar situated persons in regard to whom should they marry. In the 1960s this argument was used to strike down the miscegenation laws that forbade whites and blacks to marry on the grounds you can NOT treat blacks and whites differently, thus is a black wants to marry a white the state can not forbid such a marriage under the Equal Protection Clause.

Now, the equal Protection Clause has always permitted different treatment between the Sexes when the state has some good rationale for the different treatment (For example the State can forbid men and women from using the same restrooms). Now, their has been some contention in this area of the law, for example can the state forbid women from going topless while permitting men to go topless? On the face the answer should be no but the Courts have avoided the subject, aided by the fact most women do NOT want to go topless in public, other than on beaches (and some old laws rarely enforced that forbid men to go topless). The Courts biggest problem is the fact women can breast feed and men can not. This come sup in Custody cases where a women is breast feeding her baby. How do you give equal time to the father when Doctors states Breast feeding is good for the baby, Not-breasting feeding will dry a women breast's up and the father only way to "breast-feed" is considered second best by most Doctors (i.e. the "Breast pump" and other artificial Breast feeding devices)?

A third set of problem is the difference between strength in men and women. Is it fair to permit men to justify not hiring a women for she can not left as much as a man when such lifting is rarely done on a job? What about the fact women's hands are substantially smaller than a man and thus easier to to get into small openings? (Sewing is the most obvious case but they are other cases).

Thus the Courts when it comes to Equal Protection of the Law have had to handle the PHYSICAL difference between men and women. Between men or between women, the Courts have adopted a very strict rule, no discrimination unless the state can show extremely good reason for the difference treatment (and the only case the Supreme Court upheld on this grounds was the Japanese internment of WWII). On the other hand discrimination between women and men have always been treated with an easier rule for the state to meet. i.e. More than any rationale reason but less than the strict forbiddence, if the state can show a good justification for the difference in treatment.

Thus the Court will have a problem using the equal Protection Clause to require the states to permit gay-marriage. Right now most Courts rely on the fact that at the time of the Adoption of the Equal Protection Clause not as single congressmen thought or stated that the Equal Protection Clause would cover sex discrimination. In fact people at the time OPPOSED the Amendment for it is the first time in the Constitution that the term MALE is used (and that only is regard to Voting) and women suffrage Groups wanted to use the 14th Amendment to give women the right to Vote. Thus it is clear the authors of the Amendment accepted different treatment between men and women.

So far the States have avoided using the FEDERAL Equal Protection Clause for it is clear the Federal Courts will rule it is NOT a violation of the Federal Equal Protection Clause for a state to treat sex differently than race. The Federal Courts have ALWAYS treated sex differently than race. Thus it is NOT a violation of the Federal Equal Protection Clause to forbid all marriages between people of the same sex.

On the other hand, once a state permits same-sex marriages the Federal Equal Protection clause does kick in if you treat people of the same sex differently. For example this case, if these two women were Lesbians living in the US in a state that permitted same-sex marriage, how can they be permitted to marry when two sisters who are lesbians can not? If two Lesbians sisters can marry, how can you treat them differently than two sisters who do not have sex with each other? The traditional rationale against blood relatives being married (i.e. inbreeding) does not apply for you can not have children if the sex partners are of the same sex. To Keep in-breeding to a minimum is the reason people can not marry siblings, but if the siblings are of the same sex in-breeding is not a concern. Thus how can you discriminate against two people of the same sex to marry if the only reason is one set is blood relatives and the other is not? Sorry you have two people of the same sex being treating DIFFERENTLY for no rational reason. The federal Equal Protection Clause would forbid such discrimination.

Now both Vermont and Massachusetts have used States Constitutional Equal Protection Clauses to rule that the State could NOT prohibit Gay-Marriage if the State permitted Straight Marriages. Now this case will show people a way to show discrimination between two people of the same sex under the FEDERAL CONSTITUTION. Will the business community accept this? Remember we are talking about expanding the right of "Marriage" to any two people living together for any reason.

Now the Supreme Court likes "Bright lines" when it comes to the Equal Protection Clause. Traditionally the Bright lines when it comes to households were Blood relatives and people of the Household. People are often shocked when I tell people a Spouse is NOT an Heir of a Spouse, for the spouse is NOT a blood relative. Under the Common Law the rights of a Spouse were set in Law BUT ONLY IF A CHILD WAS BORN TO THE RELATIONSHIP (even if that child subsequent died). Thus a sort of blood relationship existed even between spouses in the form of their Children (Something homosexual still can not do, even in artificial insemination either the ovum or sperm of someone outside the relationship has to be used).

The other Bright line was "Of the House". This covered people who lived in the house of the Lord. What these people did was held to be the action of the Lord, thus if a servant of the house caused someone else injury, the victim could not only sue the servant but his master also. This survives in Employee-Employer liability. If someone under your employ cause someone harm, the employer is liable. I bring this up for if you start to get to far away from straight marriage I can see the Supreme Court ruling that the next bright line is people living in the same house (I can even see Scalia and Thomas voting this way knowing in many way they would be killing Gay-marriage). Once the Court rules that the next bright line is "On the house" even people living in a Commune setting would be treated as "Spouses" for employee benefits. The business community, while willing to accept the very small price of providing such benefits to homosexuals, will refuse to expand such benefits and will lobby the states to ban Gay-marriage so the Expansion to the the house will also be banned.

This expansion and then contraction will take a while, giving the GOP plenty of years to Gay-bash, but sooner or later the law will return to what it once was for the Business community is willing to pay for spouses and children of their workers medical care, but not for everyone who happens to move in with one of their employees.

14th Amendment:
http://www.law.cornell.edu/constitution/constitution.amendmentxiv.html

[Nye Bevan]

8. While I am 100% in favor of allowing gay marriage

I don't think this should extend to two siblings. It just feels kind of creepy. And what would come next- and uncle and his niece? A father and his daughter? Arguing for this could play into the hands of opponents of gay marriage- the old "slippery slope" argument.

I do sympathize with the sisters but if they got their way then it would be much too easy for anyone to avoid inheritance tax-- simply "marry" a slightly younger family member.

[AngryAmish]

9. Well, the freepers think homosexuality is creepy

Creepiness should not be a basis for laws. Let the girls marry. They won't breed so incest can't be a problem.

[SandyPond]

12. It didn't say that they were lovers

It said they were sisters. This is getting into things I had not considered. Did they say they wanted to be married....or just wanted the same alleged benefit extended?

[qwertyMike]

41. Tina Turner

"What's Love got to do with it?"

[1932]

19. I don't think the problem is creepiness. It's logic. Marriage isn't all

benefits. It's a bunch of burdens in exchange for benefits. You can't just break up, for example, without being obligated to help the other spouse get on his or her feet, and you can't abandon children from the marriage. Also, it creates tax burdens and benefits.

That's part of the reason you get the tax break -- it's a recognition of the benefits AND burdens of marriage/domestic partnership.

Being a sibling doesn't imply any legal burdens that I can think of. If you gave siblings a huge tax break, it being a sibling would be a huge benefit with no offsetting burden, and I'm not sure that there's much of a logical justification for that.

[HarukaTheTrophyWife]

28. The NJ Domestic Partnership laws allows any two adults to register as a DP

If they were in NJ and registered as Domestic Partners, would you find these women creepy?

Heterosexual couples, homosexual couples, siblings, parent & child. It affords them a few rights, but nothing as full as marriage would. However, it does protect people financially and it has nothing to do with sex. I follow the gay marriage case in NJ and that aspect of the law hasn't played into the hands of gay marriage opponents. In fact, NJ will most likely become the 2nd state to allow gay marriage.

[SoCalDem]

14. Every adult should have the "pick ONE" option

and leave sex totally out of it..

[Xithras]

15. Agree completely.

"Marriage", from the perspective of the government, is nothing more than a legal partnership. People should have unfettered freedom to choose any partner they want, whether out of love or simple convenience.

[SoCalDem]

16. and the single man or woman who has an uninsured sister/parent

/friend/whomever, should be allowed to carry them , IF married people get an option to carry family..

[KittyWampus]

54. And please to keep the word "Marriage" out of it. Too many connotations

A Civil Union Contract sounds about right for any two committed people.

[1932]

18. You can only have two people in a gay or hetero couple. You could have

dozens of siblings. If siblings could pass estates tax free, it could create powerful, super wealth families within a single generation. One, young sibling could amass the wealth of all siblings (assuming they didn't want to pass it on to their own spouses or children). Eventually the wealth would have to move downwards though, so it would be taxed then.

This is an interesting issue, but I don't really see the logic in allowing siblings to transfer wealth to each other tax free. In this case, the parents shouldn't have given their estates outright to the children if the concern was that when one died, the other would have to sell the real property to cover the tax bill. The parents should have left the property in trust for the life of the children.

[sandnsea]

21. Change the tax law, if necessary

If it is so onerous that one can't even pass on a house without tax, then the tax law should be changed. There's no logic in dragging marriage into it.

[1932]

30. I disagree.

The goal of tax law shouldn't be to make every transfer easy. Parent's can't pass ownership of large estates to children without, in some cases, forcing the children to sell the property. That doesn't mean we should get rid of estate tax.

In this case, there was a solution to the problem. If parents have children whom they want to allow to live in a house for ther lifetimes without worrying about them being able to aford estate tax, then they shouldn't have passed ownership to the children on the parents death. They should have created a trust the survived for the life of the children and then vested, creating a taxable transfer only at that time. The kids don't have to pay taxes when one dies, but they didn't get full ownership, so that's fair.

Furthermore, I don't think sibling to sibling transfers of legal titel in property should be tax free for the reasons I said above. People could have dozens of spouses, so that you could end up consolidating a lot of fortunes into a huge fortune without taxing it once. Also, tax breaks should be benefits that go along with burdens. There are burdens of being married (if you get divorced, you have responsibilities to the spouse. But there are no burdens of being a sibling. It's a relationship you could completely ingore with no legal consequences. It doesn't make sense that tax law would honor such a relationship with a huge tax break.

[sandnsea]

32. A family home should not be taxes

I think we generally agree, all I'm saying is that if an estate as small as a typical family home can't be transferred without taxes, then that's a problem with the tax law. I don't care who is doing the transferring. Small estates shouldn't be taxed. Gay marriage has got absolutely nothing to do with it, it's a pure tax issue and I don't know why these women brought marriage into it at all. It hurts their case by muddling it up with social issues.

[1932]

33. It's not the "family" home. Had it been the family home --

if all the members had their names on the title and held it as joint tenants or as partners -- then they could die out and leave it to the survivor without trigerring taxes. This

There are plenty of things you do with title that allow you to avoid taxes -- but you have to give up some of the privileges of ownership to get the tax benefit -- like be the beneficiary of a trust. I'm not sure, but, possibly, joint tenants with a right suvivorship might be a way to evade a taxable transer. In that case, a JT's kids won't take title if you die before the other joint tenants. And I think that's the key here. If siblings could pass title without incurring taxes, you'd be conferring a huge benefit -- tax free transfers of the full title in property to people who have no legal obligations to each other (unlike spouses) and are lucky to be born the siblings of wealthy people -- without imposing any restrictions or legal burdens.

I think the UK has similar estate tax exemptions as the US, so this probably isn't such a small estate.

[sandnsea]

34. Is is the family home

"The sisters looked after their parents and two aunts at their home near Marlborough, Wilts, until their deaths. They now care for each other. But when one of the sisters dies, the other will face a hefty bill for inheritance tax.

They fear that the home they inherited from their parents will then have to be sold."

And since you don't know what the estate tax laws are in the UK, I'm not quite sure why you're chiming in here on what these two sisters "should" do. Regardless, it IS either an unfair tax issue OR two greedy sisters. It has nothing to do with marriage. These sisters, and their lawyer, are foolish to drag controversial social issues into estate law where people's sympathies are already with family MORE than gay couples anyway.

I'm betting the family home is the LAST bit of anything that these sisters have and one of them is going to end up homeless if they can't get it straightened out. I don't know why they aren't both on the title, or whatever has happened, but they're obviously concerned enough about their security to raise a pretty big ruckous. I don't think they'd do that if they were talking about some multi-million dollar estate.

[1932]

35. My point is, if it were the family home, they would have already owned a

piece of it. If they inherited it, they didn't own it before. If families made all family members joint tenants with a right of survivorship, and therefore all members were agreeing that nobody had exclusinve ownership, and that the last survivor would eventually get the full title, then, I think, the house could pass outside the estate -- but that's how you have to give up something (full legal title) to get something (tax free transfers). I would call THAT a family home. Otherwise, it's the parents home.

To say that people should be able to inherit everything from their parents tax free is not something with which I don't agree.

As I said, I'm pretty sure there are reasonable exemptions to estate tax in the UK.

[muriel_volestrangler]

36. The threshold for inheritance tax is £285,000

which will buy you a 3 bedroomed house in Marlborough (see http://www.email4property.co.uk/marlborough/estate-agents.htm - and type in some amounts in the "property for sale" box to see what you can get).

What parents can do, and I suspect these did (and maybe the aunts mentioned), is pass on part ownership of a house to their children when the first one dies, up to that £285,000 amount, without incurring tax. If the house is worth more than that (very likely for any house in which the 2 parents, their 2 children, and the 2 aunts lived in), then the other parent (and maybe the aunts, if they had a share) could have passed along another £285,000 worth (or the earlier equivalent) without their estates paying tax either. So it's possible the sisters have inherited the house, so far, without paying tax (especially considering prices have gone up considerably in the past few years - they've roughly tripled in the last 10), because they've inherited it a bit at a time. But it's possible, even if they've managed to get their shares of the house equal, that if it's worth, say £750,000 (that gets you some very nice looking 4 bedroomed houses in Marlborough), their shares of the house alone (£375,000) are above the limit - so one will have to pay £36,000 tax (£90,000 @ 40%) on the death of the other.

No, I don't think a trust could have been set up to mean they can avoid paying inheritance tax on the death of one of them. They would be adults who enjoy the full use of the property, so would legally considered owners.

I see the sisters' point of view (and said so at the time the civil partnership act was passed). They show just as much commitment to each other as any heterosexual or homosexual couple. That they don't have a sexual relationship (which might also apply to an elderly non-related couple, anyway) shouldn't have a bearing on their tax treatment, I think. But the government argument seems to be "you're related, so you're expected to support each other, even if it costs you money, but if you choose to support someone you don't have to, you'll get some government help".

[sandnsea]

42. Since housing costs have increased

Then I'm gathering that the problem is the limit where one doesn't have to pay inheritance tax. If the threshold were higher, had kept up with inflation, then these 2 sisters wouldn't have a problem. It's a pure tax and economic problem, not a matter of relationships at all. They should be fighting to have the threshold increased and I'd bet a majority of people would support that since they could very likely find themselves in that position too. Any inheritance law that doesn't protect the typical family home needs to be changed.

[1932]

44. I'm not sure how wise it is socially and economically to let property

accumulate with people who were lucky to have wealthy parents just because you're very sentimental about "family homes."

Paying #40,000 to keep a #375,000 asset that you got out of good fortune of birth is pretty sweet deal, if you ask me.

[sandnsea]

46. home, savings, jewelry, heirlooms

Whatever meager amount a typical family has managed to accrue over a lifetime. We make allowances for that in this country, we don't tax the first million in an estate. It doesn't sound like the UK has these kinds of limits and if they don't, they ought to. It's the only way the working class will ever have an opportunity to accumulate some wealth and security. I don't know why anybody would object to that. In the case of these two sisters, it isn't a question of whether getting a #375,000 house is worth #40,000 in tax, it's a question of them not having the #40,000 to pay and being thrown out of their home at 80 years old. It's morally wrong.

[1932]

48. If you want to argue that a million is just the right exemption and that

#375k in the UK is lower than $1M in the US after considering inflated real estate prices and whether the UK has suffered the same thing, then we need to look at the exchange rates and compare similar properties -- I'm not going to just rely on the anecdote in the OP. And, I'd like to see what $1M is getting heirs in the US. Is it REALLY benefitting a lot of middle class people when so many middle class people have second and third mortgages of terms of 30 years or more on their homes and leaving very little equity to middle class children?

Paying #40K for a #375K asset might be a great deal. And like I said, if they want to stay in it for their lives -- if that's your concern -- they can very likely donate the legal title to a charity and retain the right to stay in it for their lives (which is the real property equivalent of a charitable gift annuity).

Oh but what about their children! Shouldn't they be able to live in the house too because their parents lived in the house? Where does it end?

I think you're being moved by a story that just might be written to move people to feel sorry for people who might actually have a pretty sweet deal as it is (people who are going to inherit wealth when so many other people have parents who die in debt and live in countries where there's no tax base to provide vital services).

I do think there's a problem with estate tax -- I think people should be taxed at their individual rates for property they inherit, rather than taxing the estate itself above a reasonable exemption for real property. But I don't think we need to keep jacking up the estate tax exemption so that more and more wealth can change hands beetween relatively well-off people untaxed.

[sandnsea]

49. Wow

I guess you just don't like the idea of anybody accumulating any wealth. That's your right to your opinion. I think it's pathetic for working class folks to manage to pay for a home or put away a little savings, and then have it go for taxes instead of staying in the family. You prefer the government get it, like I say, I guess you've got a right to your opinion. Glad most folks don't think like you do.

Bye now.

[1932]

55. I am very enthusiastic about accumulation of wealth

through things like work and being rewarded for your contributions to society.

RELATIVELY SPEAKING, I'm not so enthusiastic about accumulating wealth and power because of accidents of birth, and when allocating the tax burden, I think we should treat work better than we treat inheritance.

Which is why I spend time reading posts at LIBERAL discussion boards.



On Edit: I even have more respect for people willing to risk capital than people who got lucky enough to have rich relatives, and would tax capital gains lower than inheritance.

[sandnsea]

62. We're not talking about rich people here

We're talking about people who worked their whole lives to accumulate a house and maybe a few dollars in the bank. Working people know you don't accumulate wealth through work. The only way future generation have any sort of security is to have one generation pass some of their wealth to the next. Most of us aren't in the less than 1% who have enough wealth to pay estate tax on anyway. And it really doesn't sound like you care about these folks paying a fair tax anyway since you keep saying they should shelter what they have through estate planning. Why not just create a cap that reflects today's economics instead of requiring people to pay lawyers and court fees to do what can be done with a common sense estate tax law.

[1932]

75. Ugh. The only way for working people to have security SHOULDN'T be

inheritance. And most working people inherit very little anyway, so letting people with a lot of assets avpoid taxes isn't going to help them. If you hope to create a world where the most valuable asset that you can pass from generation to generation is knowledge and a willingness to work, you're not going to do it by lowering to zero effective rates of inheritance tax.

That "it sounds like you don't care" statement suggest to me that you don't really understand what I'm trying to say or what is at stake with inheritance tax issues. If you reread what I wrote above, or if you understood inheritance tax you'd appreciated that you can't benefit from "sheltering" assets from income tax unless you give up legal title to some degree. It is a fair trade off. These sisters could leave a charitable annuity of the house while retaining a life estate IF THEY GIVE UP LEGAL TITLE TO A CHARITY.

[muriel_volestrangler]

51. No, this is precisely a matter of relationships

Raising the limit would mean that many people who don't actually live together would stop paying inheritance tax. That's not what people are trying to achieve. The whole point here is that people who have shared a house for a long period as adults, and who support each other in the same way as married heterosexual couples, or homosexual couples with a registered civil partnership, cannot pool their assets in the way those other couples can.

The House of Lords proposed that any pair over 30, who had lived in the same household for at least 12 years, should be allowed to register under the same civil partnership rules, but the House of Commons turned that down. That's a fairly stiff test - not one that would be entered into lightly (after all, marriages don't require proof of 12 years of mutual support before they can be started). I don't think it would be a significant tax loophole.

You could take the view that the only special rules allowed for couples, whether married, registered, siblings or whatever, should be when they have dependents in their care. But I don't think married couples will ever give up their tax rights, just for the sake of fairness. So I think those rights should be extended to siblings who show the equivalent committment to each other.

[1932]

57. See my last post below.

We're still talking about estates over the exemption, and, althout the stereoptype people imagine is a couple aunts in a decrepit old house, I get the feeling that, once you take into account the exemption, and you look at the demographics of the people who would benefit, you might see a lot of people out on country estates where siblings might have pieds-a-terre in london, but consider the estate their primary residence who now have a way to keep those estates in the family a little longer (or even in perpetuity) without ever having to account to the government when they tranfers assets (which would still be something, for example, employees still had to do when receiving their paycheques from their employers).

After all, who shares a house for 30 years these days? Some old maid aunts, sure. But a lot of people on family estates do too.

[muriel_volestrangler]

67. Your examples sound very unlikely to me

Remember that this ability to allow a transfer would be restricted to people both of whom who have no marriage or civil partnership; and if you take the House of Lords suggested rules, they'd have to share a home for 12 years before they qualify (and both be over 30). That really will make the target demographic the 'maiden aunt' types.

[1932]

70. The bigger the house, and the longer it has been in the family, the more

likely this test will be satisfied...and that says "country estate" to me.

[sandnsea]

61. I just don't see it that way

I understand what they want, I just don't see it as a relationship issue. I see it as an issue of setting a figure that allows for passing the typical estate and letting it go at that. I don't see any reason that siblings should have more claim to committed care than two friends. Spouses and couples are different because the nature of that relationship is a lifelong committment and the wealth has been accumulated due to the contributions of both partners. Even if two siblings end up in the same house for life, it's most likely that they didn't plan that or contribut to each others economic success the way a married couple does. However, I still don't think anybody should lose a typical family home to estate taxes, most of the time that's the only asset working people attain and it's tragic if it goes to the state.

[muriel_volestrangler]

65. Two friends currently have the choice of the lifelong committment

being registered, and recognised, but two siblings don't. They're not asking for "more claim to committed care"; they're asking for the same possibility as an unrelated pair.

Increasing the tax threshold significantly would just cost the state money, while benefitting overwhelmingly people who are getting an inheritance they don't 'need' to keep their home. People in the situation of these sisters are relatively uncommon; changing to the rules proposed by the House of Lords would help them, while losing little in tax revenues.

[sandnsea]

66. In the US, it's 99% of people

Who don't pay estate tax anyway because the truth is most people never accumulate much wealth to begin with. That's why it doesn't matter to me whether it's two friends, a committed couple, two siblings, two strangers for that matter. I think the truly wealthy have gotten quite enough out of the system to pay a little more in taxes, and that working folks have given quite enough in their lifetime and should be able to pass on what little they managed to accumulate without being taxed further. It's just the way I see it and no amount of explanation is going to change my mind on it. If you folks in the UK are taxing a few thousand dollars and a home, I just disagree with it on its face.

[muriel_volestrangler]

68. Currently, it's 6% of estates that pay some inheritance tax

http://money.guardian.co.uk/tax/inheritancetax/story/0,,1854712,00.html

If house prices continue to rise above the rate at which the threshold is increased, that will go up; and the rise in people who own their own homes (that largely happened during the 1980s) will make the number go up too.

The point of tax is to take it from people who have the ability to pay without it badly hitting their lives. So taxing an inheritance that goes to someone who lives in a different home, and is thus effectively an exceptional bit of their income, is better than taxing one that goes to someone who needs it to remain in their home.

[sandnsea]

71. Thanks

I agree that the tax should be on those who have the ability to pay, and certainly shouldn't put people out of their homes. I don't know how the sisters in question ended up in a situation where one would be evicted if only the top 6% pay inheritance tax, but that kind of goes to my concern. They shouldn't be able to protect their estate based on relationship only, then anybody could make that claim and circumvent estate tax altogether. That's why I think it should apply based on the size of the estate and if that threshold hasn't kept up with inflation, then the threshold should be changed.

But anyway, it is good to know that the estate situation doesn't seem that different in the UK than here. I'd hate to think folks were losing their homes or life savings to taxes.

[1932]

43. The parents could have set up a trust giving the daughters a life

estate for the life of the last to die and then the trust could have vested title anywhere else, like a charity, or the child of a daughter. The daughters could have lived in the house until the end of the life of the last one to die without having to pay estate taxes. Also, I thik the daughters could probably donate the legal title to a charity while retaining beneficial ownership for their life and they could live in the house AND take a charitable deduction for the gift of the legal title according to a formula. There are ways to not pay taxes, but they involve not retaining the legal title, and I suspect they'd rather sell the house, pay taxes, and keep the difference, then live in the house and lose the legal title.

I think there is a difference between siblings and spouses/partners. Firstly, just taking the example I stated above, siblings have parents who are more likely to set up the kind of trust I described. Secondly, and more importantly, siblings have no legal burdens that stem from their relationship (unless you want to call the inability to make tax-free transfers at death to each other a burden!). If married people divorce, they have obligations to each other and to their issue. Siblings don't have those kinds of burdens. Giving them tax free transfers at death is a huge benefit with no consequent burdens or risks. Siblings MIGHT support each other. But they have no legal obligation to do so.

Now, if you want to create legal obligations on siblings to support each other, and if you want to create the equivalent of divorce for siblings, then we can talk about giving them the tax-free death transfers.

[muriel_volestrangler]

50. Yes, that is what they want - the option to create legal obligations

As sisters, they don't have the option to form a civil partnership, (which has its own equivalent of divorce). Homosexual couples got it with the introduction of civil partnerships, without a sexual relationship being a necessary condition of it; but those who are closely related are expressly not allowed to. These sisters live together, and want to assume the full legal obligations that a homosexual civil partnership, or a heterosexual marriage, entail. This isn't a call for the general exemption of siblings from inheritance tax - it's for those who live together and support each other, as other couples do.

How they inherited their house from their parents is really a side issue. If the pair had been a married couple, who had lived there looking after the parents of one of them, they could have inherited the house in exactly the same way as they have now, but would now be able to jointly own the house without taxes having to be paid on the death of the first of them.

Yes, it is a burden that they can't make tax-free transfers to each other on a death - it could force the survivor to move out of their house. This situation was one of the prime examples given of why civil partnerships were needed for homosexual couples.

[1932]

56. As I said, I don't think siblings should get tax-free transfers at death

by virtue of merely being siblings, so the question is whether siblings should be able to register as domestic partners.

Domestic parthership is not just about sex or rasing families, since there's no compulsion for same-sex and hetero couples to have sex or have kids.

But perhaps it is a significant factor that families would use this as a mechanism to keep property in the family and avoid taxes.

I don't think that tax-free transfers at death is an entitlement. It's a concession. It used to be that married couples couldn't do it, and that exception was created. I'm all for treating domestic partners the same as spouses. But I'm not enthusiastic about continuing to broaden the categories so that inheritance tax becomes a meaningless concept.

And, as I've said above, there are ways for non-married/d.p. individuals to avoid taxes in their lifetime, but they involve giving up legal title in their lifetime. So, these sisters could live in this house during their lifetime, they just would have to give up the right to sell the house for full value while they are alive.

[1932]

31. I disagree.

The goal of tax law shouldn't be to make every transfer easy. Parent's can't pass ownership of large estates to children without, in some cases, forcing the children to sell the property. That doesn't mean we should get rid of estate tax.

In this case, there was a solution to the problem. If parents have children whom they want to allow to live in a house for ther lifetimes without worrying about them being able to aford estate tax, then they shouldn't have passed ownership to the children on the parents death. They should have created a trust the survived for the life of the children and then vested, creating a taxable transfer only at that time. The kids don't have to pay taxes when one dies, but they didn't get full ownership, so that's fair.

Furthermore, I don't think sibling to sibling transfers of legal titel in property should be tax free for the reasons I said above. People could have dozens of spouses, so that you could end up consolidating a lot of fortunes into a huge fortune without taxing it once. Also, tax breaks should be benefits that go along with burdens. There are burdens of being married (if you get divorced, you have responsibilities to the spouse. But there are no burdens of being a sibling. It's a relationship you could completely ingore with no legal consequences. It doesn't make sense that tax law would honor such a relationship with a huge tax break.

[dsc]

38. I have much more sympathy for this couple

than I do for unmarried heterosexual couples who try the same thing. I honestly don't know the solution to this one. It seems that there should be some reasonable way out of this mess.

[1932]

45. Yes. Donate legal title to a charity and retain the right to live in the

house until you die.

Also, hetero or same-sex couples who do this aren't just signing a paper that entitles them ONLY to benefits, like tax free transfer on death. They're exposing themselves to a lot of risk too. If they break up, they may have to support the other partner and they'll have to divide up property aquired during the relationship.

They're exposing themselves to way more legal obligations than two siblings have to each other.

[dsc]

52. that depends

I have seen unmarried couples sue to get benefits at work with no legal paper at all between them. I do like your solution to the sister's problem.

[1932]

60. Just to clarify...

...when a private employer decides to confer same-sex benefits as a mechanism to attract and retain good employees regardless of what the law requires, I see that as a little different from the government requiring employers to do that.

Whereas an employer may or may not require documentation for whatever reason, when the government does the same, there are formalities, and consequent legal benefits and burdens imposed by the government. That's what I'm talking about in my post above.

[NashVegas]

58. This Story Isn't What Some of You Seem to Think - It's "Death Tax" Time

As opposed to "estate tax."

When the Civil Partnership Act came into force last year, that exemption was extended to same-sex couples. But siblings and descendants are not allowed to register as civil partners, and so are not eligible for the tax advantage.

....

Jonathan Crow, for the Government, said the decision not to grant tax exemptions to siblings and descendants was justified because they were linked by blood while married couples and same-sex civil partners enjoyed a relationship of choice.

Basically, the law is that widows or widowers (hetero or otherwise) apparently get a very nice little tax exemption, while the other survivors do not.

I suppose the better question is, should the surviving legal partner get the bonus in the first place? This is something we don't do in the US.

[1932]

59. I agree, and I'd just like to add two points.

First: This story picks a sentimental example that would be the exception, not the rule, if siblings could register as domestic partners or if people who lived together for 30 years at the same address regardless of relationship got tax-free death transfers. As I said in a post upstream, if this were allowed, what you'd see is family estates where twenty relatives list a 50 room mansion as their primary residence, even if they only live there a few months a year, and they'd be able to keep it in the family forever. It would be a back-door way to return to the days when families could pass on wealth untaxed. I think it's a really sneaky way to make people feel sorry for rich people and want them to be able to avoid estate taxes.

The second point is that, in the US, it wasn't so long ago (only a few decades) since we didn't have a tax-free transfer to surviving spouses. It used to be the case that a rich husband died, and if his estate was bigger than the exemption, his widow had to pay estate tax. I'm glad my grandma didn't have to pay estate tax when my grandfather died, but I'm not sure it would have been totally unfair if she had, and I'm not sure she even would have had to without some very simple estate planning. I think it's important to reflect on whether we want to keep broadening the exemptions for estate tax to the point that it becomes a meaningless concept.

[sandnsea]

63. Because couples BOTH contribute to the estate

Or is somebody going to dare say a stay-at-home wife/mother/SO doesn't contribute anything to a family's finances??? Couples should absolutely be able to pass estates tax free.

Beyond that, we cap it in this country. It's currently around $1.5 mil and going up from there. It protects over 99% of all estates in this country because we don't believe working people should lose what they worked for to taxes. We reserve that kind of taxation to jackpot wealth, which almost nobody ever attains.

[NashVegas]

69. Dead People Never Lose What They've Worked For

FYI, people of wealth got that way by knowing how to get wealthy and stay wealthy.

They know how to pass their wealth to their heirs in such a way that maximizes what those heirs get, and minimizes what the government gets.

[sandnsea]

72. And can afford to pay for that info

which people who struggle to even make their house payment can't afford. So why in the world would anybody want to take the little bit that they managed to accumulate away from them? I just don't get it.

[Eric J in MN]

73. In the US, widows don't pay the estate tax.

It's after both parents die that their offspring pay it.

[Eric J in MN]

74. The solution is to let them pay the tax gradually...

...spread out over enough years that they don't have to sell the house.

It's not to expand the definition of civil partnerships in a way that no one has to pay the estate tax.