Separating, but remaining married

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Mr Eastwood

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My wife and I are going to remain married for the rest of our lives, but going to live in separate properties. She is going to remain in the family home, and I am going to buy a small property.

We have a will whereby everything goes to the surviving spouse, and that is going to remain in force by agreement of us both. As per the will instructions, all assets will pass to our children on the death of both of us

I am in receipt of the full state pension and a private pension of about 11K. My wife is in receipt of about 90% of the state pension, all paid into our joint account. We should have 150K in savings after the property purchase, also in our joint account, and we plan to continue with that. Both of us trust each other without question

I have 4 questions and would greatly appreciate any advice

1/ Will the surviving spouse be liable for inheritance tax on the death of the other spouse?

2/ The family home is in my name only as I purchased it before we married. For decades I have been meaning to inquire about the benefits of putting it in joint names but never got around to it. Should we do that now before I move to the other property?

3/ Should the purchase of the new property be in my name only or in joint names - I strongly suspect joint names is the correct answer given our circumstances and wishes.

4/ Is there any negative tax implication (or indeed non tax implications) in our plans.

Thanks to all in advance
 
I think it will be simpler when one spouse dies if all assets are in joint names. Although the deeds of you ppd is in your name currently your spouse has a lot of protection under the family home protection act. When you plan to live separately but still married that protection is gone, so she would be exposed to a risk of you selling it without her consent. So before you move to your new home regularise the current home into joint ownership.

It sounds as if you both need independent legal advice. You will be buying a property jointly, making joint wills, and coming to some arrangement on funding both lifestyles and home.

So put ppd into joint names
Purchase second home jointly
Make the wills
Agree on finances
Move out

When one spouse dies everything goes to the other spouse. It should be very stress free. And as you are both still married there should be no tax implication at all.

It is great that there is a lot of trust between you, but would either of you plan to enter into another relationship then that might change things.
 
Mr Eastwood said:
We have a will whereby everything goes to the surviving spouse, and that is going to remain in force by agreement of us both. As per the will instructions, all assets will pass to our children on the death of both of us
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This is not an easy situation or a decision you or your wife could have come to lightly of course.

If I read it correctly the main reason you are not divorcing is to take advantage of the spousal exemption for capital acquisitions tax, and therefore preserve wealth for your kids.

I wonder is a better solution judicial separation? You are unable to re-marry and you can take advantage in due course of the spousal exemption for CAT. A JS would put a legal structure on the rest of your financial arrangements. I know you trust each other now but things can change over time and it might be better.

Something to think about is the Fair Deal scheme as well which it's likely one or other of you will need. I don't know the eligibility well but you need to reflect if you would be treated best as divorced, judicially separated, or married.

Finally it's worth taking (separate) legal advice on this but bear in mind solicitors have a vested interest in a more complicated solution where people are adversarial, not a simple one.
 
Clamball and NoRegretsCoyote, thanks very much to both of you
Clamball said:
so she would be exposed to a risk of you selling it without her consent.
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That absolutely would not happen. However I fully accept your advice is wise.
You say make the wills. We both have wills already and I think they should cover all eventualities. Everything goes to the surviving spouse, and on the death of both of us, all goes to our children.
NoRegretsCoyote said:
This is not an easy situation or a decision you or your wife could have come to lightly of course
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Thanks for your thoughtful words. Yes indeed, it is a very painful decision.
NoRegretsCoyote said:
If I read it correctly the main reason you are not divorcing is to take advantage of the spousal exemption for capital acquisitions tax, and therefore preserve wealth for your kids
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That would certainly be top of our priorities. Both of us feel that when one of us dies, our assets are in safe hands with the surviving spouse, and will be safely passed on
NoRegretsCoyote said:
I wonder is a better solution judicial separation?
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I'm totally unfamiliar with this, will look it up in google. Will also look into the fair deal situation

The main attraction of the route described in my initial question is the simplicity of it. It avoids the stress of dealing with solicitors, who will no doubt recommend maximum protection for both of us. It also avoids the the cost of the legal advice and the cost of whatever procedures they recommend. (that's not to say its not the correct route)

Thanks again to both of you, and all further thoughts welcome
 
Mr Eastwood said:
I'm totally unfamiliar with this, will look it up in google.
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It was basically the best you could get before divorce was introduced. Details here. The main difference is you can't remarry but you can still avail of the spousal CAT exemption.

Mr Eastwood said:
It avoids the stress of dealing with solicitors, who will no doubt recommend maximum protection for both of us.
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There are positives and negatives in doing so. If you have a high level of trust then that's a good thing and maybe better left alone.


For my part, if you are financially autonomous, with own houses, and no longer dependent it might make more sense to end the marriage and have your kids inherit directly from you. It's not clear to me why you need the assets to go to the surviving spouse first before inheritance to your kids. If one of you passes away the other shouldn't need the other's house.

Anyway a lot to think about and not easy by any means.
 
NoRegretsCoyote said:
For my part, if you are financially autonomous, with own houses, and no longer dependent it might make more sense to end the marriage and have your kids inherit directly from you. It's not clear to me why you need the assets to go to the surviving spouse first before inheritance to your kids. If one of you passes away the other shouldn't need the other's house.
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The value of our existing house is about 4 times the value of the property I propose to purchase. If assets were to be divided equally it would mean selling existing house and buying two properties, something neither of us want, plus, it would be adding further stress to us. Or, my wife keeping existing house, me purchasing new property and keeping all the cash assets, that is also far from ideal. Even though she would have the larger half of the assets, she would be very cash poor.

Also, in the event of the death of one of us, I think it is more desirable for the survivor to inherit the benefit of all the assets, particularly the cash assets, and the lower value property could be converted to cash assets if desired
 
Thanks vey much to both of you. Any further thoughts or advice on tax, financial, or legal implications greatly accepted
 
What happens if you were to pre-decease your wife, she inherits everything and then remarries? If she then pre-deceased the new spouse, would your children still inherit all the assets you are trying to protect for them? Is there a way to ensure that? It's good to think of all possibilities, no matter how unlikely they might seem.
 
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Yes that's an interesting scenario. As you say its good to think of all possibilities, and of course it would be a possibility. In our case I firmly believe it is so unlikely that I can discount it with a good degree of certainty. Thanks very much for your thought.
 
Somebody has said to me that even though we will remain married, in the eyes of the state including revenue, we will be de facto not married. Any advice/thoughts on this would be greatly appreciated
 
Mr Eastwood said:
Somebody has said to me that even though we will remain married, in the eyes of the state including revenue, we will be de facto not married. Any advice/thoughts on this would be greatly appreciated
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I'd be fairly certain that somebody is wrong. How old are you and your wife? I can understand this potential approach if you're both in your 70s but if not you've a lot of living yet to do and potentially further relationships that will complicate matters.
 
Mr Eastwood said:
Somebody has said to me that even though we will remain married, in the eyes of the state including revenue, we will be de facto not married. Any advice/thoughts on this would be greatly appreciated
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Just to sort income tax first...
The basis on which you would be assessable to income tax depends on whether or not there would be maintenance payments.
Perhaps you would clarify.
 
Sophrosyne said:
Just to sort income tax first...
The basis on which you would be assessable to income tax depends on whether or not there would be maintenance payments.
Perhaps you would clarify.
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But they wouldn't be maintenance payments as nothing is being formalised - there is no legal separation so it would just be money from husband to wife or vice versa so nothing to do with Income Tax liabilities.
 
Sophrosyne said:
The Tax Acts distinguish between a couple living together and a couple living apart,
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But to what extent would this impact the OP and his wife who wish to live apart but remain married?

Would any payment or transfer of assets be taxable? I'm open to correction but I can't see it.
 
Sophrosyne said:
Just to sort income tax first...
The basis on which you would be assessable to income tax depends on whether or not there would be maintenance payments.
Perhaps you would clarify
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Hi Sophrosyne, to clarify, Our preferred plan is to remain married, My wife's pension and my two pensions are been paid into our joint account. Both of us have cash access to this account, and we have debit cards on that account. Neither of us would be reckless spenders, we are fairly equally matched in that regard
 
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