The growing number of unmarried couples who buy houses together could face drastic financial difficulties in the event of the death of one of the partners. The shadow of a hefty inheritance tax bill on the value of the family home - and the potential of being forced to sell that home to pay the bill - hangs over many cohabitees unless they take specific measures to deal with the implications of the State's inheritance tax rules.

The relevant provision does not affect married couples, only unmarried cohabitees who co-own a property with the deeds in their joint names.

There are 31,298 unmarried couples living together, according to figures from the Central Statistics Office based on the last census, in 1996. Many of these couples are more than 30 years old, which shows that co-habitation is increasingly an option for people in a permanent union rather than as a precursor to marriage.

Under the State's inheritance tax rules, if an unmarried couple purchases a house and one of them dies, the survivor is viewed as a legal "stranger" who must pay tax on the proportion of the property he or she inherits.

Depending on how much the survivor has contributed to the property, this tax could be assessed on as much as 100 per cent of its value.

Mr Ben O'Rafferty, a solicitor whose firm specialises in family law and conveyancing, says there has been a "massive increase" in the numbers of unmarried partners buying houses together.

"The problem does arise very, very often nowadays by virtue of the fact that there are so many people who are not married who are purchasing property jointly," he says.

Mr Jonathan Cairns, a director of the mortgage, life and pensions broker, Irish Mortgage Network, says the most common complaint unmarried couples make when he explains that they would not have to pay inheritance tax on the family home if they were married is that "it's just not fair".

He says many unmarried couples who buy a house together, and often consider themselves married in all but name, are not aware of the position the survivor would be in if the other partner died.

"People are very, very angry when they realise that the Government is going to take so much from them because they are not married. There's a bad feeling towards the tax and the unfairness of the situation."

Mr Cairns specialises in advising unmarried couples jointly buying property how to overcome the "unfairness" of the tax system. He says he knows of several cases where survivors were forced to sell their homes to pay their inheritance tax bills.

As a separated man now in a stable second union, Mr Cairns says he first became aware of the inheritance tax problem when he co-bought a house for £85,000 with his current partner, who does not work outside the home. He learned that, if he died, his partner would have to pay more than £25,000 in inheritance tax.

The provision affects women more often than men, as they generally live longer than their partners and are more likely not to work outside the home.

"When I went through it myself, I started to look into it and I noticed that there were so many people purchasing property without being married and the financial institutions and the solicitors were not mentioning to them that they had this problem looming, or that there was a way around it," according to Jonathan Cairns.

One "way around it" is for cohabitees to insure each other's life for the value of the property they jointly own plus the amount of the inheritance tax due - in Mr Cairns's case about £110,000 (£85,000 plus £25,000).

This "life of another" policy, which is similar to the "Section 60" exemption in the Finance Act 1985, should be index linked.

Under the policy, Mr Cairns now owns his partner's policy and vice versa. So, if he dies, the policy on his life would not become part of his estate. His partner would receive the current value of the policy to pay off the mortgage as well as the inheritance tax.

"People are genuinely relieved when it's sorted out. In the case of couples who have come through a broken marriage, it's one less thing to have to worry about," he says.

Mr Cairns says that some 40 per cent of his company's clients are divorced, separated or cohabiting couples. The company is also a general mortgage broker which deals with first-time buyers, investors and commercial clients.

Mr Alan Shatter TD, with Gallagher Slattery solicitors, says if people have cohabited for a "reasonably lengthy" period of time and jointly own a property, then there is a "strong case" for exempting them from inheritance tax.

"When we didn't have divorce, this law was extremely unjust. But now that we have divorce, it's a very difficult social policy issue to resolve," says Mr Shatter.

"The other problem is, do you apply it to other joint owned property or to other couples whose sexual orientation is not heterosexual."