A marital breakdown is a very stressful and emotional time for all parties concerned. It can also be fraught with complex financial transactions as assets and incomes are divided and ownership assigned. As with any financial transactions there are tax implications when a couple separate – in fact there are different rules applying to informal separation, formal separation and divorce; and each situation can be quite complex.
While this can be a very difficult process it is important that the tax implications are assessed before making any binding decisions. Such decisions can have long term, and unforeseen, consequences if the full picture from a tax point of view is not considered.
We work with our clients to secure a fair and equitable distribution which will not place an undue tax burden on them. We look at areas such as:
- Maintenance payments – payments to children are usually exempt but payments to a spouse or civil partner may have tax implications
- Payments between spouses or cohabitants
- Tax issues regarding succession planning
- Issues regarding inheritance tax
- Property tax issues including transfer of family home – if structured properly this should not have tax implications
- Both spouses may be entitled to the Single Parent’s Tax Credit and an increased standard rate cut-off point
- Joint assessment may still be an option, even after formal separation has occurred
- Advice on the breakdown of a civil partnership
Our business is based on creating strong relationships with our clients. At a time when financial – and emotional – well being is being scrutinised we are there to help our clients, providing practical advice and support. If cases are prolonged and require legal steps we assist our clients by:
- Advising on the financial position of both spouses
- Preparing the Statement of Affairs, or reviewing the other party’s submissions
- Liaising with the legal team
- Providing conflict resolution services