Gift of cash question

I presume that you are assuming that she will not spend it before the hypothetical divorce.

I suspect it can be done with a discretionary trust, as used to be done, in wills, for inheritance tax purposes. If so, it would be taxed at a rate which would be disadvantageous if she is not a higher rate payer. She would also not be able to include it in her will; you will have to specify what happens on her death. You might need to employ an independent trustee, to convince the HMRC that you really had relinquished beneficial ownership.

I'm probably completely wrong, though.

How about lending it to her (without interest) with an exchange of letters to make it clear that it is a loan and not a gift.

Robert

make it clear that it is a loan and not a gift.

That sounds like an interesting idea. Presumably if they did split up the husband would be jointly liable for her debt.

Chris

not if he wasn't party to the "exchange of letters"

tim

make it clear that it is a loan and not a gift.

If you expect to have inheritance tax charged on your estate, a loan would remain chargeable to your estate indefinitely, whereas a gift could be completely ignored after 7 years. Trying to play it both ways would be considered fraud.

Fortunately, as there is no business relationship, I think I'm right in saying that she is saved from paying tax on the difference between the interest rate and a commercial rate.

This is not suggested to evade IHT but to avoid her husband (or estranged husband) having a claim on 50% of the "gift".

Peter