What is Inheritance Tax and How Can I Reduce It?
Inheritance Tax (IHT) is tax you pay on your death when you leave certain assets to loved ones more than currently £325,000 at the current rate of 40%.
Inheritance Tax is not payable if the value of your estate you leave is less than £325,000 or you leave your estate to a spouse, civil partner or a UK registered charity.
Form E – Financial Statement on Divorce
What is a Form E?
A Form E is a detailed form setting out your financial details, including the needs of yourself and the children. Both you and your spouse have a duty to provide full and frank disclosure in your Form E, giving full details of all your finances including; capital, income and pensions. You also need to provide a comprehensive schedule of outgoings and expenses. Download Form E and Download Expenses Schedule.
What is an Undertaking
Undertakings are a common part of the Court process, and are defined as a legal promise to do, or not do, something. It is a promise to the Court, and if you break it there are ways that it can be enforced. If broken, you could be at risk of being fined, or put in prison for a short period of time, but these are the most extreme consequences.
Why it is important to have a Financial Order on Divorce.
Divorce Law has been prominent in the news recently. First of all with Mrs Wright in the case of Wright v Wright being told that she must work and then yesterday, with the ruling in Wyatt v Vince in the Supreme Court whereby the Court found that Wyatt could still pursue her financial claims against Mr Vince, despite the fact that they had separated in 1984 and finally divorced in 1991.
In this remarkable case, the Supreme Court ruled that Kathleen Wyatt could still bring a financial claim against Mr Vince under the Matrimonial Causes Act 1973, because at the time of their Divorce they did not enter into a financial agreement which dismissed their respective financial claims against each other.
In the absence of a Financial Order, either party is at liberty to apply, at any time, for financial provision against the other, even twenty four years later.
Whilst the Supreme Court ruled that Wyatt could bring her claim, they were not encouraging as to her prospects of success at trial, given the length of time which has elapsed. The reality is, however, that a claim for financial provision will necessitate Mr Vince having to incur further legal costs and he may, therefore, be advised to pay Ms Wyatt a lump sum, simply to bring these proceedings to an end.
It is for this reason that you are always advised to have a Consent Order prepared when you divorce, even in the most straightforward of cases. It is important to ensure that the Court makes an order confirming that you will each have no further claims against each other or the Estate of the two of you.
The Consent Order should be prepared by solicitors. Ideally you and your spouse would reach an agreement between you as to what will happen with the finances (even if nothing is to happen) and your solicitors will then prepare a Financial Agreement. This will be submitted to Court together with a brief document setting out your financial position. The proposed agreement is then passed to a Judge who will consider whether it is fair and reasonable. If he considers it to be fair, then he will approve the Proposed Order and it becomes binding and irrevocable.
Had Mr Vince and Mrs Wyatt had such an agreement in place at the time of their Divorce, Ms Wyatt would never have been permitted to even bring the claim against Mr Vince.
Rachel Watson 12th March 2015
What happens with the finances on divorce?
The end of a relationship or marriage can be an extremely emotional and stressful time. It may be difficult for you to make decisions to ensure that you protect the future for you and your family. Sorting out money is, for most couples, the most daunting part of separation and divorce.