Divorce and money - advice for friend
Discussion
Hi, this is being asked on behalf of a friend (really, it is.)
Friend has been married for a number of years (I think 15+) to a lady who now wants to divorce him. The friend is a guy whom my wife and I have known for a lot of years and hold in high regard, the lady is a complex character whom we know less well.
Friend has an adult son from a previous marriage and has no children with the current wife. He has a house with significant equity in it which he owned before we was married to the current wife. He also has other assets, some of which he also owned beforehand. Total value is north of £100k but he is not a powerfully built director type, more just a hard-working guy who has been careful with his money.
He clearly wants to protect his position as much as possible and it sounds like his solicitor has advised him to give away as much as he can before the divorce. I'm a little surprised by this as I thought that such things weren't looked upon that kindly by divorce courts. I also understand that he can only give away £3k/year without running into tax problems (plus another £3k if he gave away nothing in the last year).
Part of the issue concerns the value of various share and fund investments he has. He has an amount of money in an investment fund (Fundsmith, FWIW) and wants to know whether he can give this away as a single item to his son.
Friend works, as does his wife.
I'm not about to second guess his solicitor as IANAL and they are but what advice would you give to the friend?
I'll send this link to the friend so he can see the advice given, so please keep it kind and respectful. Thanks.
Friend has been married for a number of years (I think 15+) to a lady who now wants to divorce him. The friend is a guy whom my wife and I have known for a lot of years and hold in high regard, the lady is a complex character whom we know less well.
Friend has an adult son from a previous marriage and has no children with the current wife. He has a house with significant equity in it which he owned before we was married to the current wife. He also has other assets, some of which he also owned beforehand. Total value is north of £100k but he is not a powerfully built director type, more just a hard-working guy who has been careful with his money.
He clearly wants to protect his position as much as possible and it sounds like his solicitor has advised him to give away as much as he can before the divorce. I'm a little surprised by this as I thought that such things weren't looked upon that kindly by divorce courts. I also understand that he can only give away £3k/year without running into tax problems (plus another £3k if he gave away nothing in the last year).
Part of the issue concerns the value of various share and fund investments he has. He has an amount of money in an investment fund (Fundsmith, FWIW) and wants to know whether he can give this away as a single item to his son.
Friend works, as does his wife.
I'm not about to second guess his solicitor as IANAL and they are but what advice would you give to the friend?
I'll send this link to the friend so he can see the advice given, so please keep it kind and respectful. Thanks.
There’s gifting money then spending money. I’ve known people when divorce comes knocking to instantly buy that dream car or watch. I guess you can always sell those after?
I’m no expert or solicitor just reporting what I’ve seen happen. I’m sure others have been through this and will know what’s allowed.
Sounds like he definitely should gift as much as possible to his son. Is there a wedding to pay for as well?
I’m no expert or solicitor just reporting what I’ve seen happen. I’m sure others have been through this and will know what’s allowed.
Sounds like he definitely should gift as much as possible to his son. Is there a wedding to pay for as well?
2Btoo said:
. I also understand that he can only give away £3k/year without running into tax problems (plus another £3k if he gave away nothing in the last year).
He can give away as much as he likes without tax problems. The tax problems only start if he dies within 7 years, and he estate is over the IHT limit. TwigtheWonderkid said:
He can give away as much as he likes without tax problems. The tax problems only start if he dies within 7 years, and he estate is over the IHT limit.
Twig, Thanks. Are you sure?
The reason I ask is that the more I google the more I come up with people who say that you can only up to £3k/year to someone who isn't your spouse (or a charity). It doesn't say what happens if you exceed those limits but I'm guessing that the beneficiary is liable for tax on it at their marginal rate.
konark said:
Ooh ....giving all your assets away just before a divorce. Bet no-ones ever thought of that before.
Funnily enough - it was one of the first things the mediator made clear - if you are discovered not declaring assets - offloading them etc - the judge is going to rip you a brand new one.Best advice I can give - go to mediator - ( get a qualified divorce lawyer ) - it is cheaper all round - and they should steer you both into an acceptable compromise.
The proposed compromise will go in front of a judge - and if it doesn't pass their smell test..... they can intervene.
If divorce is going to happen - don't make the lawyer rich with back and forth letters.
Just view it as a process of allocations of assets that a judge would find fair and equitable.
Edit - I should add - the mediator will write up a report on how both parties have behaved.
The Ex Jenny Tailor hid a pension pot of notable value - which was discovered and the mediator made it very clear of the consequences.
Edited by Jenny Tailor on Wednesday 26th January 17:28
freenote said:
She’s gonna get half of what he has now. It’s only gonna cost him more if he tries to get clever. Courts are in the woman’s favour here and the fact he owned the house prior means nothing - it’s the marital home.
Just been through it - it’s a massive kick in the nuts I’m afraid.
Just been through it - it’s a massive kick in the nuts I’m afraid.
Jenny Tailor said:
Funnily enough - it was one of the first things the mediator made clear - if you are discovered not declaring assets - offloading them etc - the judge is going to rip you a brand new one.
This 100%, better get used to the idea of losing at least half.Would it not be accurate to say as a rough starting point she is entitled to half the equity in the house and assets acquired during marriage but not entitled to the part of the £100k in assets acquired pre marriage.
He can give away as much as he likes to his son but has to survive 7 years otherwise there could be IHT implications.
If he is conviced his wife actually knows about the fund and wants to transfer the Vanguard Fund to his son it will have to be sold and the son can either have the cash or he will have to reinvest in his own name preferably using his ISA allowance if applicable.
He can give away as much as he likes to his son but has to survive 7 years otherwise there could be IHT implications.
If he is conviced his wife actually knows about the fund and wants to transfer the Vanguard Fund to his son it will have to be sold and the son can either have the cash or he will have to reinvest in his own name preferably using his ISA allowance if applicable.
2Btoo said:
TwigtheWonderkid said:
He can give away as much as he likes without tax problems. The tax problems only start if he dies within 7 years, and he estate is over the IHT limit.
Twig, Thanks. Are you sure?
The reason I ask is that the more I google the more I come up with people who say that you can only up to £3k/year to someone who isn't your spouse (or a charity). It doesn't say what happens if you exceed those limits but I'm guessing that the beneficiary is liable for tax on it at their marginal rate.
TwigtheWonderkid said:
Yes, I'm sure. These IHT limits that come into play if you die within 7 years seems to have become part of urban myth that they are limits you can give away. They aren't. People win the lottery and give family and friends hundreds of thousands, it's not a tax issue at all.
Good point, thank you. And thanks for answering the direct question. Having fairly recently been through this, together 20 years and married 5, the mediator asked for a year of bank statements and queried movements of cash. I was told the courts wouldn’t look kindly on trying to hide stuff. Assume 50% split of everything although he might benefit by the fact he has a child previous.
11 yrs plus marriage, then the other half has a significant claim to the marital home and other assets.
Personally I think it stinks that an individual can move in with a very solvent gentleman, stay with him 11 yrs plus and then come out very much sorted so.
Is the son normal mainstream guy ?, any special needs?, is your friend down as his carer as well as his Dad?. If he is then the son would have a very large claim to his Dads overall worth.
Normal working son ?, I say you should be looking at a 33/33/33 split.
Personally I think it stinks that an individual can move in with a very solvent gentleman, stay with him 11 yrs plus and then come out very much sorted so.
Is the son normal mainstream guy ?, any special needs?, is your friend down as his carer as well as his Dad?. If he is then the son would have a very large claim to his Dads overall worth.
Normal working son ?, I say you should be looking at a 33/33/33 split.
2Btoo said:
TwigtheWonderkid said:
Yes, I'm sure. These IHT limits that come into play if you die within 7 years seems to have become part of urban myth that they are limits you can give away. They aren't. People win the lottery and give family and friends hundreds of thousands, it's not a tax issue at all.
Good point, thank you. And thanks for answering the direct question. Abdul Abulbul Amir said:
Whilst Twig is correct, re the lottery..what tends to happen is that winners nominate others to receive part of the winnings directly, this avoids potential IHT issues.
I'd be amazed if that's true - the winner would still be directing where the money goes, so why would HMRC ignore that?Are you sure you're not thinking of syndicates, where there's supposed to be a document in place before the win?
Abdul Abulbul Amir said:
2Btoo said:
TwigtheWonderkid said:
Yes, I'm sure. These IHT limits that come into play if you die within 7 years seems to have become part of urban myth that they are limits you can give away. They aren't. People win the lottery and give family and friends hundreds of thousands, it's not a tax issue at all.
Good point, thank you. And thanks for answering the direct question. Gassing Station | The Lounge | Top of Page | What's New | My Stuff