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Divorce

Starting points for having positive conversations with your clients about divorce.

What should you talk about when it comes to Divorce?

In this section you'll find information to help you when you’re dealing with a client that is going through this often difficult time. 
 

Product solution options

Pensions are often a couple’s biggest asset after the family home. In this section you’ll find information to help you discuss how your client could rebuild their pension after a divorce.

Defined Benefit Schemes

The value of a Defined Benefit Scheme can’t be released immediately. So, as a starting point your client will need to get a Cash Equivalent Transfer Value from their scheme before divorce negotiations start. 

Tax on transfer of assets

In divorce, tax is an area most people often don’t think about. But it’s important that a client understands the impact to their tax situation when it comes to dividing and transferring assets. 

Wills

It’s essential that your client understands that their Will is up-to-date, so that their estate passes to who they want it to. They also need to be aware that when the court has finalised a divorce, an existing Will may no longer be effective. 

Capital Gains Tax (CGT) in divorce

After a divorce has been finalised, ex-spouses may be liable to pay CGT on transferring their assets. As each individual has an annual exempt amount of £12,300 (2021/22), anything over this amount may be subject to CGT.

The inter-spouse CGT free relief applies to separating couples but only until the end of the tax year of permanent separation and after that the relief is lost. 

Inheritance Tax (IHT)

Transfers between spouses are exempt from IHT. However, after a divorce has been finalised transfers between ex-spouses are treated as Potentially Exempt Transfers and will usually be exempt from IHT if the donor survives 7 years. Although it is possible to transfer any unused percentage of the IHT nil rate band (NRB) from a deceased spouse or civil partner to the surviving spouse or civil partner, no transfer is possible where the first death occurs after the couple have divorced.

Transferable nil rate band: the facts

Powers of Attorney (POAs)

Often you would choose your spouse to deal with your affairs when you die. In the case of a POA, divorce will usually end a spouse's appointment as your attorney.

Severing joint-tenancy

If joint-tenancy has been severed it won't affect any divorce settlement. The court has the authority to agree who will become the sole owner of the family home.

Advice Opportunities

Insight from our experts on specific generational needs, as well as the principal life events that drive intergenerational needs, helping you open up new conversations.

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It's good to talk...

For any help or support for your client’s needs, please don’t hesitate to contact one of our expert Account Managers.