Divorce in Scotland

DivorceinScotland

Afternoon fellow Forumites, 

Well it looks like my parents will finally be getting divorced. 

They've been married and living together 30+ years, they are both over 60 but under SPA and retired. Together they have 3 adult children all living elsewhere and all over the age of 30 including myself. 

One of them has decided to suddenly buy their own property to start the process of moving themselves out despite not having sufficient income to support themselves or assets beyond purchasing the property. Although at the moment it's somewhat amicable, grown apart and mental health issues etc, but things will need to be formalised to make it sustainable.

The obvious questions at the moment relates to assets, neither of them are financially savvy and have never needed to be. For the past decade or so I've generally always sorted things from Utilities to Savings accounts and Investments etc. 

Together they own and have lived in the family home for 30+ years although they haven't shared a bed or a bedroom for over a decade.  

Employment history for one parent is straightforward, they worked their entire career for the same public sector employer until retirement a few years ago. They have a significant DB pension that started accruing before marriage and is the primary means of covering living expenses at the moment. 

The other parent has a patchy employment history, nothing for around a decade or more but has a smaller DB pension that is also in payment and also started accruing before marriage. 

One partner has twice received inheritance from family, the first inheritance was relatively small a long time ago and used to pay a lump sum off the mortgage. This arguably also allowed for higher AVC payments toward the larger pension which was still being accrued. The second inheritance was much later a rather significant and forms the basis of any non-housing and non-pension assets available. Again opportunity was used to increase AVC payments into the primary DB pension. Some of these AVCs were then converted to additional annual pension at a preferential rate to allow the earlier than normal retirement. 

Are there any simple rules for dividing pension assets, the simplest would be to work out the entitlement one parent has to the larger DB pension and get a Pension Sharing order. I understand this then means they'd get their own DB pension paid to them by the scheme therefore falling under their under utilised personal allowance. 

How would this entitlement be worked out? value of accrual between date of marriage and date of the pension coming into payment?

I understand the first inheritance can essentially be disregarded as it was paid into the mortgage on the family home. I'd guess that by default the value of the property will be split equally between both parents. 

This leaves us with the second inheritance, having a Google seems to indicate that under Scottish Law inheritances aren't considered joint matrimonial property/assets? can anyone help me understand if this is indeed correct or something open to some interpretation. 

Apologies if the above post is a bit rambling, as you can imagine I'm a bit stressed given the circumstances. 

Brie

I know it's the case for England (& Wales I believe) that all assets will be taken into account and basically the split will be 50/50.  So no difference if the inheritance was to mom or dad, they both get half.  Likewise the pensions.  So someone is going to have to tot everything up just about to the penny and split things down the middle.  Likely the one with the smaller pension will keep that for themselves and then get more of the "cash" while the other gets their larger pension and a smaller pot of ££.  Or there might be a pension splitting order for the large one at least.

Whether the same applies in Scotland is beyond my ken.  

sheramber

You need to contact a divorce solicitor as  pension split is not straightforward per  https://www.thorntons-law.co.uk/for-you/thorntons-family-law-divorce-solicitors/financial-divorce-settlements/pension-rights-on-divorce#:~:text=In Scotland, only the lump,who is to receive it.

In Scotland , only the pension accumulated during the marriage is relevant, so not any amount before marriage or after the split.

Both parties can .of course, agree otherwise.

tightauldgit

I did look at this before and yes inheritances in Scotland are not matrimonial property so should effectively be ringfenced for the recipient before considering any remaining assets in the split. Though if it's spent on things that become matrimonial property that would then be different.

Assets acquired pre/post marriage are also not considered. 

DivorceinScotland

Brie said:

I know it's the case for England (& Wales I believe) that all assets will be taken into account and basically the split will be 50/50.  So no difference if the inheritance was to mom or dad, they both get half.  Likewise the pensions.  So someone is going to have to tot everything up just about to the penny and split things down the middle.  Likely the one with the smaller pension will keep that for themselves and then get more of the "cash" while the other gets their larger pension and a smaller pot of ££.  Or there might be a pension splitting order for the large one at least.

Whether the same applies in Scotland is beyond my ken.  

Hello Brie, Indeed there appear to be some considerable differences between Scottish and rUK law. It's going to head down the Pensions Sharing Order route to ensure each parents has enough DB pension to live on until each getting their State Pension in a few years. The issue with a straight up equal split of all assets would mean the family home would need to be sold. The parent who hasn't decided to get their own place is hoping to retain it, for a while at least, having had 3 kids brought up there since birth has some attachment. If inheritances are excluded from the matrimonial assets there are just about enough to offset the share of the family home.  

sheramber said:
You need to contact a divorce solicitor as  pension split is not straightforward per (link removed)

In Scotland , only the pension accumulated during the marriage is relevant, so not any amount before marriage or after the split.

Both parties can .of course, agree otherwise.

Hello shreramber, they'll be seeing solicitors as soon as practicable. It should be by the end of this week as appointments have been. I've made them aware that a Pensions Sharing Order is something only a solicitor can organise and doesn't come cheap. I've also made them aware it's not something that will happen quickly especially for DB pensions already in payment so more than likely into 2024 before it's done and dusted as the scheme has a number of months in which to implement it. 

tightauldgit said:

I did look at this before and yes inheritances in Scotland are not matrimonial property so should effectively be ringfenced for the recipient before considering any remaining assets in the split. Though if it's spent on things that become matrimonial property that would then be different.

Assets acquired pre/post marriage are also not considered. 

Hello tightauldgit, well that certainly seems like a Scottish username that appears to chime with my understanding of things when I had a Google of the situation. I've been using these forums for years so I'm aware of the broad range of experiences and expertise of the people who post on them. 


Thankfully in any case there is enough DB pension income to be carved up and enough assets they'll both be comfortable, once State Pensions are in payment that'll be especially true. I'm trying to remain hopeful it won't turn into a mess that then entails legal bills running around like PacMan.