PROMOTION Divorce: Don't make it more taxing Statistically, the new year signals a new start for many couples, with this being the most common time to start divorce proceedings /hilst engaging with a family lawyer is standard practice, many choose to seek professional financial advice too late, once the divorce made the payment into your pension. as a contribution when checking against This annual allowance has also the annual allowance but it will count towards their lifetime allowance. However, if the pension credit has been received from a pension in payment, the ex-spouse can request an additional lifetime allowance as the money received decreased over the years and rules introduced in April 2016 mean that, in some cases, higher earners are unable to add more than E10,000 a year to their has actually been concluded. This can potentially result in not receiving full entitlement or suffering a significant tax charge in respect of pension benefits. pension pot. These rules make sharing assets even more complicated for divorcing couples. But by working together, financial advisers and specialist family lawyers will have already been measured against the lifetime allowance when the member When it comes to splitting the assets, took their benefits, This is complicated, as a number of options, assumptions and protections need to be considered. It is best practice for your financial adviser to is often the case with pensions. It is not only the pension allowances and tax aspects that need to be can achieve the best outcomes for their clients. work together with your family lawyer to ensure you achieve the best outcome for your financial needs. considered. When accepting a pension share, you should be aware of how much income that may generate for you. For example, a pension share with a value of E150,000 seems a considerable lump PENSION OPTIONS For anyone in the UK with a pension and getting divorced, PENSIONS there are three basic options: Offsetting: whereby you leave the pension alone, but your es-spouse receives a different asset instead. The lifetime allowance is the maximum sum, but when actually converted into an income, it could potentially equate to just £6,200 a year, subject to personal details and exact requirements - before the deduction of income taxt amount that can be saved into pension funds before a tax charge is made. An understanding of the lifetime allowance, and how the order in which benefits are Earmarking: some of the income is paid to the ex-spouse when the member decides to draw pension benefits. This can be unpopular as the ex-spouse has little control over the money or when shared affects an individual's tax position, is vital. The aim is to achieve a fair settlement that leaves as much money as possible for the divorcing couple to share. they receive their pension income. Pension Sharing: this is the most popular method. This involves a physical split of the pension fund and a transfer to another arrangement, or existing pension if held. Pension sharing has implications for both the member and the ex spouse. For the member, the value of any pension debit (the amount transferred away) from a pension that has not been crystallised (pension benefits drawn) will not count towards the member's lifetime The lifetime allowance has reduced over the years from C18m to E1.055m, which has caused more people to obtain protection agalnst tax. The percentage of those divorcing later in life, and closer to retirement, is rising These circumstances If you would like to discuss how your can interact and it is therefore important to seek advice from your lawyer and financial adviser before a settlement pension could be impacted by divorce with a financial planner, please contact Kim Williams at Kreston Reeves Financial is defined by the Court. Doing it in the incorrect order can make a significant difference to the taxbill and financial Planning Limited on 01227 768 231 or kim.williamsekrestonreeves.com position, payable by the two parties. allowance. If the member has registered for some form of protection, it will have an impact on that, but it differs depending on The annual allowance is the maximum you are able to pay into your pension if KRESTON "REEVES you wish to receive income tax relief. If you exceed this amount, your income tax bill will increase - regardless of who different types of protection. For the ex-spouse, the amount they receive (a pension eredit) is not treated Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com PROMOTION Divorce: Don't make it more taxing Statistically, the new year signals a new start for many couples, with this being the most common time to start divorce proceedings /hilst engaging with a family lawyer is standard practice, many choose to seek professional financial advice too late, once the divorce made the payment into your pension. as a contribution when checking against This annual allowance has also the annual allowance but it will count towards their lifetime allowance. However, if the pension credit has been received from a pension in payment, the ex-spouse can request an additional lifetime allowance as the money received decreased over the years and rules introduced in April 2016 mean that, in some cases, higher earners are unable to add more than E10,000 a year to their has actually been concluded. This can potentially result in not receiving full entitlement or suffering a significant tax charge in respect of pension benefits. pension pot. These rules make sharing assets even more complicated for divorcing couples. But by working together, financial advisers and specialist family lawyers will have already been measured against the lifetime allowance when the member When it comes to splitting the assets, took their benefits, This is complicated, as a number of options, assumptions and protections need to be considered. It is best practice for your financial adviser to is often the case with pensions. It is not only the pension allowances and tax aspects that need to be can achieve the best outcomes for their clients. work together with your family lawyer to ensure you achieve the best outcome for your financial needs. considered. When accepting a pension share, you should be aware of how much income that may generate for you. For example, a pension share with a value of E150,000 seems a considerable lump PENSION OPTIONS For anyone in the UK with a pension and getting divorced, PENSIONS there are three basic options: Offsetting: whereby you leave the pension alone, but your es-spouse receives a different asset instead. The lifetime allowance is the maximum sum, but when actually converted into an income, it could potentially equate to just £6,200 a year, subject to personal details and exact requirements - before the deduction of income taxt amount that can be saved into pension funds before a tax charge is made. An understanding of the lifetime allowance, and how the order in which benefits are Earmarking: some of the income is paid to the ex-spouse when the member decides to draw pension benefits. This can be unpopular as the ex-spouse has little control over the money or when shared affects an individual's tax position, is vital. The aim is to achieve a fair settlement that leaves as much money as possible for the divorcing couple to share. they receive their pension income. Pension Sharing: this is the most popular method. This involves a physical split of the pension fund and a transfer to another arrangement, or existing pension if held. Pension sharing has implications for both the member and the ex spouse. For the member, the value of any pension debit (the amount transferred away) from a pension that has not been crystallised (pension benefits drawn) will not count towards the member's lifetime The lifetime allowance has reduced over the years from C18m to E1.055m, which has caused more people to obtain protection agalnst tax. The percentage of those divorcing later in life, and closer to retirement, is rising These circumstances If you would like to discuss how your can interact and it is therefore important to seek advice from your lawyer and financial adviser before a settlement pension could be impacted by divorce with a financial planner, please contact Kim Williams at Kreston Reeves Financial is defined by the Court. Doing it in the incorrect order can make a significant difference to the taxbill and financial Planning Limited on 01227 768 231 or kim.williamsekrestonreeves.com position, payable by the two parties. allowance. If the member has registered for some form of protection, it will have an impact on that, but it differs depending on The annual allowance is the maximum you are able to pay into your pension if KRESTON "REEVES you wish to receive income tax relief. If you exceed this amount, your income tax bill will increase - regardless of who different types of protection. For the ex-spouse, the amount they receive (a pension eredit) is not treated Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com