Chris Etherington

Written by: Chris Etherington

Chris Etherington

Partner

How Guernsey’s assisted-dying law could provide tax relief for the bereaved

Since the announcement of Guernsey’s assisted-dying bill, backed by the island’s chief minister Gavin St Pier, there has been fierce debate on the ethics and morality of the proposals. Guernsey’s parliament will vote on the measures next month. 

If approved, the bill could resolve the often-overlooked problem of financial suffering for the families. Currently, assisted dying is not legal in the UK and there is a significant difference in the subsequent tax and legal implications from those who die of natural causes.

It is common for married couples to leave their assets to their surviving spouse in their Will. Ordinarily, no IHT should arise in these circumstances and there can also be a significant Capital Gains Tax (CGT) benefit.   

Also, when one spouse has a terminal illness it is not unusual for them to receive assets carrying substantial capital gains from the other spouse as these will be washed out on death and the potential CGT liability extinguished. In fact, HMRC make reference to this kind of 'deathbed planning’ in their guidance, acknowledging it represents standard planning; as close to a tacit approval from HMRC as they are going to give.

By comparison, the position for spouses in assisted-dying cases is dramatically different. There is a common law policy, the ‘forfeiture rule’, which prevents someone who has unlawfully killed another from benefitting from their death.

That means the surviving spouse in cases of assisted dying could potentially lose everything they were entitled to in their spouse’s Will, including the family home. Assets could instead be distributed to distant family members and subject to IHT at a rate of up to 40 per cent instead of being exempt. 

This is understandably deeply distressing for the families but legislation does exist which makes it possible to apply to the Court to request that the ‘forfeiture rule’ isn’t applied. The rule will always apply in cases involving murder but can be set aside in cases of assisted dying. Financial issues may therefore be avoided but there is a toll to pay in navigating the legal system.  

It is hard to imagine many couples will have focused on the potentially disastrous legal and financial implications of assisted dying; however, should Guernsey be successful in its efforts in legalising doctor-assisted death in the British Isles, it could bring an end to such additional distress.

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