My impending divorce...

stevechoo

Hello everyone, as the title states I have just started the process of dealing with my divorce..

At the moment it's quite amicable and it would be nice to keep it that way.. my wife is seeing her solicitor next week, I am currently awaiting a call back from a local solicitor... I have a couple of questions that it would be good to have some feedback on in the meantime if possible please...

We've broadly agreed the financial between us, it's around 50/50..

The questions I have are:-

1. I inherited some money a few years back, it was incorporated into the joint estate, does that make any difference in regards to the weighting of the settlement? I'm guessing it doesn't but I just thought I'd ask..

2. I have a reasonable sum of money in my money purchase pensions.  If I want to draw them down then I have to comply with UK income tax law after taking the 25% tax free element, that I understand.  My question on this is, is any of that potential future tax deductible when putting a total value on the joint estate?

3. My wife has a small defined benefit pension, is this applicable for inclusion when valuing the joint estate? If so, how do u put a value on it..

I don't want to split hairs unnecessarily with my wife but I can't help but feel at the moment that if the defined benefit pension has a value as I've asked above then her settlement as it stands maybe greater than 50%, especially if my money purchase pensions stand at 100% in terms of the joint estate valuation.

Any feedback will be greatly appreciated..

Many thanks in advance

DullGreyGuy

stevechoo said:

Hello everyone, as the title states I have just started the process of dealing with my divorce..

At the moment it's quite amicable and it would be nice to keep it that way.. my wife is seeing her solicitor next week, I am currently awaiting a call back from a local solicitor... I have a couple of questions that it would be good to have some feedback on in the meantime if possible please...

We've broadly agreed the financial between us, it's around 50/50..

The questions I have are:-

1. I inherited some money a few years back, it was incorporated into the joint estate, does that make any difference in regards to the weighting of the settlement? I'm guessing it doesn't but I just thought I'd ask..

2. I have a reasonable sum of money in my money purchase pensions.  If I want to draw them down then I have to comply with UK income tax law after taking the 25% tax free element, that I understand.  My question on this is, is any of that potential future tax deductible when putting a total value on the joint estate?

3. My wife has a small defined benefit pension, is this applicable for inclusion when valuing the joint estate? If so, how do u put a value on it..

I don't want to split hairs unnecessarily with my wife but I can't help but feel at the moment that if the defined benefit pension has a value as I've asked above then her settlement as it stands maybe greater than 50%, especially if my money purchase pensions stand at 100% in terms of the joint estate valuation.

Any feedback will be greatly appreciated..

Many thanks in advance

1) No, inheritances will generally be considered joint

2) No, the pension will be valued based on today, if you decided to share one or both the pensions the courts issues a Pensions Sharing Order which doesn't attract taxes now. If you decide you want to do things in the future which will greatly increase your tax liability thats your problem alone

3) Yes, it forms part of the joint estate like yours, the part of the PSO process is the court asking for a valuation... I imagine she could ask them in advance for confirmation though it may change slightly between the dates


Sharing 50/50 means each walk away with 50% of the total value of the net estate it doesn't mean everyone gets 50% of everything so if you dont want to share your pension you can pay her more cash now or take on more debt to offset it so think in advance how you ideally want to achieve the split not how do you split everything.

stevechoo

That's very informative, thank you very much...

With regards to the pension share from my money purchase pensions, does that mean I could potentially transfer the settlement figure from my pension into hers if she agreed to it, as opposed to me remortgaging the main residence which I intend to stay living in?....

VyEu

1) yes but mainly because you mixed it with the matrimonial assets so yes it's up for sharing.
2) the pensions value/split would be decided now, not what the future value is.
3)both of you should obtain CETVs i.e. transfer values of each others pensions (will also need to be stated on the d81 form). Note that the CETV of DB pensions often undervalued the true value of the pension.

Pension values are not equivalent to cash in the bank. So giving her (for example) 50k worth of pension is not the same as giving her 50k in cash

Kynthia

She should ask her pension administrator for a Cash Equivalent Transfer Value for the purpose of divorce. It's important they know it's for a divorce as what they might offer her in exchange for no longer providing a defined benefit pension might be a different value. This may take some time so ask your solicitors when she should ask for this.