The tax gap nobody mentions
Married couples and civil partners can leave everything to each other with no inheritance tax at all. The exemption is unlimited.
Cohabiting couples get no such treatment. For inheritance tax purposes, your partner of 15 years is treated like any stranger. The most they can receive from you tax free is €20,000 (the 2026 threshold). Anything above that is taxed at 33%.
A simple example. Aoife and Conor have lived together for 12 years and have two young children. They rent their home. Each owns a small investment property, bought years ago, in towns they have no intention of moving to.
Conor dies suddenly. His will leaves his investment property, valued at €280,000, to Aoife. The mortgage is cleared by his mortgage protection policy, so she inherits the property debt free.
Here is the tax:
- Value inherited: €280,000
- Tax-free threshold: €20,000
- Taxable amount: €260,000
- Tax at 33%: €85,800
Aoife is grieving, raising two children alone, and now owes Revenue almost €86,000. Unless she has other savings, she may have to sell the very property that was meant to secure the family’s future.
A married couple in the same position would owe nothing.
Life of another cover can fill the gap
You can’t remove the tax bill, but you can plan to be able to pay it. The usual way is a “life of another” policy.
It works like this. Aoife takes out a life policy on Conor’s life. She owns the policy and pays the premiums. Conor does the same on Aoife’s life. If one of them dies, the proceeds go to the surviving partner as the policy owner, not as an inheritance from the deceased. So they aren’t treated as a taxable gift or inheritance, and the money can go straight towards the tax bill or towards supporting the children.
There are practical advantages too:
- The owner controls the policy and decides what happens to it.
- The surviving partner makes the claim directly.
- The money doesn’t go through the deceased’s estate, so there’s no waiting on probate.
- Relatives of the deceased can’t make a claim on the proceeds.
Couples with children generally have no trouble showing they have a financial interest in each other’s lives, which is required for this kind of cover.
Structure matters enormously here. If a policy is set up on the wrong basis, say one partner pays for a policy that pays out to the other, the proceeds may only reach the survivor through the will, and could themselves be hit by inheritance tax. Getting it right at the start is far easier than trying to fix it later.
What if only one of you earns?
This comes up often. One partner is at home with the children, or works part time, and can’t comfortably fund a policy.
One option is the small gift exemption, which allows one person to gift another up to €3,000 a year tax free. The earning partner can gift that money to the other, who then uses it towards their share of the premiums or towards the policy on the earner’s life. It won’t suit everyone, and the rules should be checked on Revenue’s website, but it can make cover affordable where it otherwise wouldn’t be.
Your family home is treated differently
There is some good news. If you own your home together, the dwelling house exemption may mean no inheritance tax is due on it. The conditions are strict, and in broad terms they are:
- The inheritor doesn’t own, or have an interest in, any other residential property.
- The house was their main home for the three years before the inheritance.
- They keep living there for six years afterwards, with limited exceptions, such as being 65 or over or having to live abroad for work.
If those conditions are met, it doesn’t matter who owned the house or who paid the mortgage. It’s one of the most valuable protections available, but it only helps with the home itself. It does nothing for an investment property like Conor’s, or for savings and other assets.
A will isn’t optional
I can’t stress this enough. Under succession law, a cohabiting partner has no automatic right to inherit anything from you, apart from assets you own jointly. If you die without a will, your estate passes to others, starting with your children and then your wider family, and your partner could be left with very little.
There is a safety net. A “qualified cohabitant” can apply to court for a share of the estate. To qualify, you must have lived together for at least five years, or two years if you have children. If either of you is still legally married to someone else, the clock doesn’t start until that person has lived apart from their spouse for four of the previous five years.
But applying to court is slow, stressful and uncertain, and it’s no substitute for a clear will. Put your wishes in writing and have a solicitor draw it up properly.
New pension rights for surviving partners
Recent legislation, the Social Welfare (Bereaved Partners and Miscellaneous Provisions) Act 2025, brings some welcome change. Cohabiting partners can now qualify for the Bereaved Partner’s Pension if they have lived together for two years with children, or five years without.
It isn’t automatic. You have to meet the legal definition of a qualified cohabitant. And it provides income support only. It gives no inheritance rights, which is another reason the will matters.
Where to start
If you’re living with a partner and you aren’t married, here is a sensible checklist:
Write a will. If you already have one, check it still reflects your life.
- Find out what your partner could inherit and what the tax could be. Add up any property, savings and investments you’d want them to receive.
Review your life cover. Check who owns each policy, who pays the premiums and who the beneficiary is. Make sure it’s set up so the proceeds reach your partner efficiently.
Check your mortgage protection so it matches what you actually owe.
- Look at the dwelling house exemption if you own your home together.
- Think about the quieter risks, such as how a partner would manage on one income, and what happens to pensions and death-in-service benefits.
None of this is about pushing anyone towards marriage. Plenty of couples choose to stay unmarried, and that’s their right. It’s about making sure that choice doesn’t cost the people you love tens of thousands of euro when they can least afford it.
If you’d like help working out what your own situation looks like, get in touch and we can go through it together.
