Both agreeing on dissolution

strugglinginDevon

https://forums.moneysavingexpert.com/discussion/comment/81951002#Comment_81951002

thanks jackieblack

Would an hour each with a local solicitor be sufficient to convince the judge we’d had independent advice? We did find a website with excellent reviews offering a complete package to do all the paperwork and draft any financial sharing order/pension sharing order for us that included legal advice. We aren’t sure if this would help us get the dissolution drawn up and signed off by the judge

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81993407#Comment_81993407

The tax issue as raised by @Exodi is only an issue if withdrawals are made from a pension ( especially a large withdrawal in one tax year) to a bank account. Then presumably handed over as cash to the other party.

As detailed the withdrawer could end up with a huge tax bill.

However if you read this link supplied earlier, there is a system in place for sharing pensions as part of a divorce settlement. Assuming we are talking about a Defined Contribution DC) pension, in this case the money is transferred still in 'pension form' and the receiver gets a new pension, or an increase to their existing one. If it is a Defined Benefit (DB) pension, it is different but the idea of 'pension sharing' is the same. So no tax issues anyway.

Pensions sharing order - full guide - Royal London for advisers ( when it asks if you are an advisor, just say yes)

The problem is that you can not just phone up the pension administrator and say you want to share your pension.

It has to be part of the divorce financial settlement and approved by the Court, before the administrators will do anything.

jackieblack

https://forums.moneysavingexpert.com/discussion/comment/81993414#Comment_81993414

My ex-husband had a ‘free half hour’ with a solicitor in the town he was living in, I had an introductory meeting with the solicitor who drew up the CO, probably about 45 mins

The judge just wanted confirmation that we had both had legal advice as to what we were each entitled to (which you are free to ignore - in a long relationship there are many more factors than simple legal entitlement)

The basis of our agreement was:

We had been married 25 years.
Our agreement didn’t involve pensions (he kept his, I kept mine, both small), and we didn’t have any other savings. I bought him out of the family home for an amount that was every penny I could afford, and he was happy with, but less than he was legally entitled to - he proposed this due to many different factors, the main ones being that he had never wanted to be a homeowner (he felt it was too much responsibility) and I had owned my own home when we met. Had we been forced to sell up and split the equity, there wouldn’t have been enough for me to be able to buy anything in the area we lived, a few miles from my elderly parents. It was his choice to leave and he felt strongly that our daughter and I should be able to stay in the home I loved. He didn’t want me to be in a worse position when he left than I had been in when we met. I was able to take over the mortgage alone, but had to extend the term for affordability. My parents gave me the cash to buy him out (they called it ‘an advance on my future inheritance’) for which I was grateful beyond measure. I know I was extremely fortunate.

Exodi

https://forums.moneysavingexpert.com/discussion/comment/81993479#Comment_81993479

The reason I mentioned it, is that it appears that the current discussions about a fair and reasonable separation suggest a scenario where they would both end up with a house and a fair split of the pension assets.

The OP would claim the house that they currently own, and the suggestion was that the OP's partner might use pension assets to buy a new house. That's why I focused so much on the ramifications of using pension assets to buy a property. E.g.

She wants to move away, start afresh and buy a home.

Also, if the pension split is agreed between the pair of us, would the funds transfer into her much smaller pension, or would it transfer into her bank/savings/current account as a cash sum, which she is hoping to use to buy a home

If the funds are coming from my SIPP, will they go into her SIPP, or could they go into her current account to use for a house purchase?

(they are almost identical in holdings and value) so they could be an option for a home purchase (which I will help her with).

The OP rephrases their question later - "I think the real question I was trying to ask, but was a little too cautious to is…. "Can i technically buy my partner out of the home with my larger pension?"

The problem, as I was trying to highlight, is that you might have someone under the belief that £Xk in property equity is equal to £Xk in a (taxable) pension pot, or that the pot could be used buy another property worth £Xk (and let's not forget conveyancing costs, stamp duty, etc).

I suspect the OP's partner will be extremely disappointed when they realise that they will lose 5 or 6 figures in tax trying to actually buy a house with a pension, as they had might have planned when agreeing to the proposal.

And this is why it's important that both parties get legal advice, as on the face of it, the OP is getting a much better deal.

poseidon1

@Exodi quite correct to highlight his concerns that the ex wife could be extremely disappointed in not realising that obtaining a portion of the OP's pension ( by itself ) does not in anyway equate to her giving up access to tax free equity in the family home.

I thought I had made that clear in my earlier post, but clearly the realities of what this means in actuality demanded a more detailed blow by blow analysis as outlined by @Exodi.

It seems to me that the wife would be ill advised entering into any arrangement without independent advice to explain clearly the tax impact of using pension sharing as the primary vehicle to buy out her equity share of the home.

Seems to me the OP should be looking at a combination of remortgaging the home (for tax free access to house equity) together with pension sharing to achieve a near equitable split of marital assets and provide the wife with more unencumbered cash to buy her own property.

Ms_Chocaholic

Are you married?

jackieblack

https://forums.moneysavingexpert.com/discussion/comment/81997641#Comment_81997641

In the first post the OP states they're in a civil partnership