The CSA and Inheritance

kevin137

"In most states, inheritance, no matter if you receive it during marriage, falls under the separate property clause. As long as the inheritance has not been used for the common benefit of both you and your spouse during marriage, it should remain in your possession after a divorce. However, there are situations in which inheritance can become community property to be divided with your spouse."

There are SOME clauses, but if i got £100,000 as an example, and it sat in an account that had just my name on it, was married for 10 years, and never touched it, then you would never get a penny of it in divorce...!

If it went into a joint account then if this was a savings account, you may be entitled to some of the interest it accrued, but you would not be entitled to half of it...

If i bought a property with it, and you invested some money to increase the value of that property, then you would have a claim for a percentage of the increased value.

If it went into a matrimonial home, THEN you WOULD have a claim...!!!

Mojisola

kevin137 wrote: »

"In most states, inheritance, no matter if you receive it during marriage, falls under the separate property clause. As long as the inheritance has not been used for the common benefit of both you and your spouse during marriage, it should remain in your possession after a divorce. However, there are situations in which inheritance can become community property to be divided with your spouse."

Is that English law or from the USA?

kevin137

It is almost identical both sides of the water, do a search on "inheritance divorce uk" and you will see that there are some things that can make a difference but there is NO guarantee that on divorce you would get a settlement from an inheritance that is for sure...!

Fission

kevin137 wrote: »

...if you have £165,000 in the bank, then £100,000 would be the assessable amount, if you got 5% interest, then you would be assessed at 8% of the interest, is how i read it... This is added to your assessment and deducted from you wages as if you earned it weekly or monthly...

Incorrect. The whole £165,000 would be subject to the 8% deemed income (£13200 a year, or £253.85 a week).

kevin137 wrote: »

However, if you inherit a property, then it is only the amount ABOVE £65,000 which is mortgage free, so if you inherit a property worth £200,000 clear and free, the advice you should receive from a financial advisor familiar with CSA and other finances would be to mortgage and buy another property, as long as no property (in your name) has more than £65,000 equity then they cannot touch it... Bizzarre...

And also incorrect. The test is "Who owns the property in reality?", not "whose name is on it?".

kevin137 wrote: »

Just go out and buy loads of property and sit back and wait 25 years till you have a huge windfall of property paid for because you wanted to avoid CSA...

That wouldn't work (at least, not without a fraudulent disguise of where the money has gone).

Inherit property worth £200,000.
Mortgage it for £150,000.
Have you only got capital of £50,000?
No - you have a property worth £50,000 net and cash worth £150,000.
Even if you buy a £150,000 property with the cash, you still have £50,000 equity plus £150,000 - it's just arithmetic.

kevin137 wrote: »

I know that it doesn't work like that in reality, the best think to do is not avoid it, do not hide it, and get some good advice...!!!

Quite so. And "good advice" would never be to commit fraud.

wayne0

if the property is owned by a company, then the OP would be an employee of the company...

you are allowed business assests which are not considered your own for CSA?

also, ive been looking into the "rental market" and as kevin suggested, it is always best to keep it a seperate business to which you are an employee... claiming a wage... the wage would be CSA payable... the business can make profits which sit in an account for years on end... this is perfectly legal...

however, if you use the money for your own purposes. (on top of the wage) then it is considered diversion of income.

this is not fraudulant... until you avoid paying tax on income etc...

btw: most "tax avoidance schemes" are perfectly legal... even if you believe them immoral or w/e.

my PIL are looking at loaning my wife and i money for my wife to set up a business in the rental market...

should my wife an i split, this business, would be classed as both of ours for a divorce, but for csa it is not my income, it would be my wifes, as she would be the only employee... and what she choses to pay herself is her business, and nothing to do with the csa or my ex.

(well at least for CS2 / new scheme - for cs1 i believe 50% of her wage would be counted?)

if it were different, why would anybody want to go self employed?

for benefit purposes, the income of the business etc would be looked at more closely, but for csa... the rules are different..

vonsworld

Thanks for all your feedback.

There seems to be some conflicting opinions here and so I wonder if we could just clarify the 8% interest assessment…

If your assets exceed £65,000 does the 8% assessment only apply to the amount above that threshold, or does it suddenly apply to the whole amount including the first £65K as well?

I ask this question because if this is really the rule it seems completely crazy! It means that if you had a few thousand over the threshold you might as well just spend it and avoid all liability. If you have £80K just go and buy a new car…

Imagine if such a rule applied to income tax! There would be no incentive to get a pay rise which put you in a higher income tax band, because after tax your take home pay would be less!

kevin137

Underused assets: If your ex has assets worth more than £65,000 (which is the level set by the CSA/C-MEC), C-MEC won’t consider them until you apply for a variation. You must identify which assets that are worth more than £65,000 are:

1. not the non-resident parent’s house
2. not invested in his business.

So investing money into property as a BUSINESS would be excluded and mean you can keep buying property and it would not be classed as income for a variation...

We can go round in circles all day with this, there are so many ways to avoid paying anything through the CSA, that is not what this is about, this is about what is right and wrong...! If someone is supporting there kids with NO problems, pay monthly without fail, and then inherit £100,000 from a family member WHY should this be assessable...? It is nothing to do with the children, the ex or anyone else...

wayne0

the same applies to low incomes when you need to get housing benefit...

i was earning a little above min wage. (about 50p more) for driving people home etc...

i told my employer to take this payment off, as i was actually worse off for it... as the housing benefit didnt take into account the fact that i paid my ex X amount a week as cm.

and at my last pay review i declined pay rises which would give me an extra 40 quid a week, because it would mean i would actually be even worse off because the csa 15%. (housing benefit would take the fact that i recieve 40 quid a week extra into account, but not the fact that i pay 15% of it to my ex.)

cant wait to see what the new system makes from universal credits and CSA...

im dealy hoping it will mean those who need to claim hb will be placed into the flat rate band... (not for want of avoiding my responsibilities - but it will mean i will be able to spend more on my son...)

Crellow4

The short answer is yes, the 8% is applied to the full amount - the first £65k is not disregarded.

kevin137

Crellow4 wrote: »

The short answer is yes, the 8% is applied to the full amount - the first £65k is not disregarded.

But only if the amount is assessable...

It can only be assessed once, so if you took and inheritance, invested it into property as a business and declared the income it received after all expenses, and then reinvested the money it made in expanding the same, then they could not take 8% but only the actual earnings which is nil if reinvested as an expansion plan...!

The point is, if you have the know how, and the ability, then they cannot touch it, if you leave it sitting in a bank, then it may well be that 8% of £100,000 is what they can touch, that does not mean they take 8% it means they take a percentage of 8% which is a big difference...!!!

£1200 for 1 child
£1600 for 2 children
£2000 for 3 children

added onto the assessment for a year as earnings...

it sounds very frightening when people say they can take 8%, they cannot, they can only assess from the 8% and that is never gonna fly with all the new legislation coming into force, and will most definitely be challengeable in Europe as an unfair way of obtaining money from an NRP as no one can earn that interest...!!! So how can it be income...!