does anybody know about a deed of trust and how it might be relevant in a financial split.
originally my husband and i wanted to separate , buy 2 properties and live separately, but we have been advised about the issue of capital gains tax.
we can`t afford to pay the inland revenue money unnecessarily so the only avenue seems to be to divorce and buy properties in individual names...that is now causing all sorts of grief re equitable split.
could a deed of trust on each property help to secure rights to each whilst being independent of each other be an option?
i know it might sound odd, but emotions are currently out of control
I may have got this entirely wrong, but the capital gains tax point typically occurs where a sale of the former marital home is deferred, perhaps for many years, to provide a home for the children. When the property is finally sold,, the gain of the parent with care will be exempt because she lives there, but the displaced parent will often have a share which is not realisable for many years, during which time he ( it usually is a he ! ) will not be living there and cannot use the private residence exemption. So there is a potential liability for capital gains tax on the gain of the non-occupying spouse. I am inclined to think anyone in this situation may be well advised to see an accountant before a Court order is drafted, to make use of any available reliefs.
But surely, unless I have missed some great truth, if you sell the house, there is no CGT liability because of the principal residence exemption provided it is done within three years of the separation ? And if the spouses each buy a house for their own occupation, wouldn't they each be entitled to a private residence exemption ? Or have I missed the point ???
Sometimes on divorce when there aren't sufficent matrimonial assets for both parties to buy their own property one party agrees/is ordered to maintain an interest in the property of the other in the form of a charge (known as a Mesher) Effectively the property is bought by/transferred to one party and a trust is drawn up to protect the interest of the other party and provided this happens within three years of separation and the trust deed is correctly worded there is no CGT liability. There are usually conditions attached such as the house is to be sold when the youngest child reaches 18, the cohabitation, remarriage or death of the PWC.
If there are sufficent assets to invest in each others properties there is no 'need' for a Mesher order and a Clean Break would be preferrable.