Pension Planning - Silver Divorce - The Last Taboo?

[Deleted User]

westv wrote: »

For some weird reason there's a fad for putting "dearest" in front of husband, wife, daughter etc..
So DH is dearest husband.

Obviously not "dearest" if they are divorcing but maybe meaning the costliest husband :rotfl:

Nebulous2

What happened to Sam or her ex which triggered a divorce and separation?

Could they have continued living under the same roof with increasingly separate lives for instance, or was the relationship too strained to allow that?

I've always been of the opinion that trading down housewise was the sensible thing to do as you retired. I worked briefly with someone who sold his big house and big car as he retired. He bought a two-bedroom retirement flat and a mobile home 70 miles away near a decent coastal golf course. He also bought a small car which his wife felt much more confident driving. I was impressed with his forward thinking and couldn't believe how many people hold onto unsuitable houses because of an emotional attachment.

Looking at the figures here though, it just doesn't work. House prices are very compressed because people go for the most they can afford. A decent 3 bed semi goes for maybe £270k. A modern 2 bed flat may well be £220k.

Selling one and buying the other means a huge loss in amenity which may only free up £30k after selling and moving costs.

That is what Sam could be competing with, a market where a big loss in housing provision is found with a relatively modest drop in price. Now try to buy two of these flats!

slopemaster

Nebulous2 wrote: »

What happened to Sam or her ex which triggered a divorce and separation?

Could they have continued living under the same roof with increasingly separate lives for instance, or was the relationship too strained to allow that?

Or separated but remained legally married?
Thus current assets could be divided, but widow(er) would remain entitled to late spouses pension.

I think that when people used to separate later in life and there was no question of remarriage, it used to be more common to go for legal separation. I suppose this possibility still exists? if only used by Catholics

jamesd

This isn't quite the last taboo. That might be getting divorced solely to get the tax advantages of having pensions split between the now former spouses. Then if desired, remarrying in the now improved tax position. Can reduce income that would be taxed at higher rate or allow full use of two people's personal allowances. A much happier case than the one unwilling spouse considered by the original post and discussion.

Malthusian

jamesd wrote: »

This isn't quite the last taboo. That might be getting divorced solely to get the tax advantages of having pensions split between the now former spouses. Then if desired, remarrying in the now improved tax position. Can reduce income that would be taxed at higher rate or allow full use of two people's personal allowances. A much happier case than the one unwilling spouse considered by the original post and discussion.

I think there is too much rusk that HMRC would come after you, using the General Anti-Abuse Rule if there is no more specific rule against it.

If it was too trivial to be worth HMRC bothering then it is unlikely it would be worth the bother and/or solicitors' fees of going through the divorce and remarriage. Equally, a case where there was a significant benefit in doing so - say a pension worth £2 million which could be split with a spouse saving up to £550,000 in lifetime allowance charge - would likely raise a red flag at HMRC when the expected tax didn't materialise.

I honestly don't know how likely it is they would investigate, and whether an HMRC challenge would succeed, but for me it fails the "could I sleep at night" test.

Furthermore, you have to consider whether your spouse will actually want to go through with the remarriage. Given that they are now of considerable independent means (having received half of what must be a very sizable pension fund for you to bother with this) and therefore rather more eligible than when you first married them.

Even if you trust your spouse 100%, in between divorce and remarriage they might go under a bus. Any Will made during marriage would be invalid, and they would die intestate. Meaning you as the ex-spouse would not receive a penny of their estate and would be unlikely to receive any discretionary payment from the pension provider either.

To me this falls into the same category as "gifting" money to non-spouses (siblings, friends) to invest on your behalf to use their tax allowances and so on. It is a bad idea because they have no legal reason to give it back to you and you have no claim to it if they die. Very similar risks to this arrangement.

System

Deleted_User wrote: »

Obviously not "dearest" if they are divorcing but maybe meaning the costliest husband :rotfl:

Dear, dearer, dearest. The most expensive husband so far.

(Zsa Zsa Gabor quote, on being asked how many husbands she had had - "you mean not counting my own?" )