Divorce and Transfer Of Assets For Tax Planning Purposes

by Readers Question

22:35 PM, 21st October 2016
About 2 years ago

Divorce and Transfer Of Assets For Tax Planning Purposes

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Divorce and Transfer Of Assets For Tax Planning Purposes

I hope you will not mind me posting anonymously but you will understand when you read my question. Divorce and Tax Planning

I read with interest on Property118 that a landlord can transfer a percentage of ownership of a property as well the tax liabilities accruing to that percentage to a spose without incurring Stamp Duty, capital gains tax and without refinancing.

This is something which is of interest to me because I am a higher rate tax payer whereas my spouse earns just £16,000 a year.

However, I haven’t been married for very long and I am worried about what would happen in the event of a marriage break up if I transfer the bulk of my assets to my spouse.

I have worked hard for what I have got and cannot afford for what is intended to be my pension and my childrens inheritance to be lost.

Can anybody tell me what the position is in this regard please?

Many thanks



Comments

Mark Alexander

22:44 PM, 21st October 2016
About 2 years ago

Hello Anonymous

It's a good question, thank you for asking it. The following is my understanding of how the system works and I hope that a qualified barrister or solicitor will come along, either to confirm my understanding or to correct me.

If the splitting of assets cannot be agreed in divorce the Courts will take into account a number of factors but the four mains ones are:-

1) The length of the marriage
2) The assets owned by the parties before the marriage and at the time of separation
3) Whether there are any children from the marriage
4) The value of assets accumulated during the marriage

Who owns what at the time the settlement is being considered is not an important factor. In other words, you should be no worse off as a result of having shared beneficial ownership for tax planning purposes save for the tax you have saved as a couple as a result of it.

As I have said, this is merely my unqualified understanding and should not be taken as advice. Ideally, this is a question for you to ask your legal adviser before proceeding with any tax planning which might involve change of ownership between spouses.
.

Steve From Leicester

17:17 PM, 24th October 2016
About 2 years ago

Mark (comment above) is right to say that all sorts of factors will be taken into account, but I can tell you from experience that its an uphill struggle persuading a judge to order a former spouse to hand back assets that you legally signed over to her, on the grounds that you only did it for the tax benefits.

However, as my solicitor at the time told me, the only sure fire way to protect your assets in the event of a relationship breakdown is "Don't get married, don't put anything in joint names".

Charles King - Barrister-At-Law

17:45 PM, 24th October 2016
About 2 years ago

Both Mark and Steve are right Anon.. If the marriage is short (say, less than 3 years) there is a general principle that 'you get out what you put in'. That means don't delay! Otherwise upon divorce all the 'matrimonial' property is up for grabs and each party is entitled to 'reasonable provision'. This sometimes means that if you were the poor one, and upon your marriage you expected to be kept in luxury, a court may will give effect to that expectation, to some extent. Children and child care change the picture enormously, so whoever does the child care and has the greater residence obligation can expect more. Good luck

Steve From Leicester

12:21 PM, 25th October 2016
About 2 years ago

Reply to the comment left by "Charles King - Barrister-At-Law" at "24/10/2016 - 17:45":

Re Charles comment about it being different in the event of a short marriage, my marriage to my previous wife was relatively short. However, because we had lived together beforehand and the period between us simply living together and being married was "seamless" it was treated as if we were married for the entire time (i.e. the time we were married plus the time we lived together).

There are times in a divorce when it does seem to be "Heads the ex wins, tails you lose"


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