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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My ex-husband who is 72 years old, is getting a divorce from

Customer Question

My ex-husband who is 72 years old, is getting a divorce from his present wife. He had promised our daughter that he would give her £150k after the divorce (he and his wife have property worth nearly £1million). He also has both private and public service pensions, and has been taking them for the past 10 years.
He has decided that he would rather give his wife all the capital so that she has no claim on his income (he is still working). He believes that in view of the Government's new policy regarding pensions, that he would be able to cash in what remains of his private pension pot and give it to our daughter.
This seems unlikely to me, but I would like to know whether it is true or not and how likely it is that he will be able to realise a significant cash sum, as if he cannot do that, I shall have to change my own plans in order to acquire a cash sum myself.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

If your ex-husband has been receiving a monthly income from his pensions for the last 10 years, it is highly improable that he will be able to cash them in as his funds would have been used to buy him annuities at the time. In effect, he has spent his pension funds on providing himself with a monthly income. I am sure that the pension payers will confirm that if he contacts them. Take a look under the heading "What if I have already taken a pension income?" here.

If, however, he has been taking irregular sums from his pensions under a drawdown arrangement as opposed to buying an annuity which I doubt then he may be able to withdraw the balances so long as he has a guaranteed source of income on which to live, ie pension income (including state pension) of at least £12,000 per annum. The level was £20,000 per annum and the new level only applied for new drawdown applicants from 27 March 2014. The minimum income requirement will be removed completely from April 2015. Earnings do not count as a guaranteed source for this purpose.

The new options for pension are outlined here, here and here.

The new pension rules being introduced by the government with effect from April 2015 will allow lump sums to be paid out of annuities but only if the annuitant or pensioner agrees to this at the outset but I doubt your ex-husband had that option 10 years ago.

I hope this helps but let me know if you have any further questions.

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