Building
society
It is common for a couple on judicial separation, divorce and nullity of marriage to have a cash balance for
emergencies in a bank or building society account. These amounts form part of the matrimonial
assets and need to be identified as part of
the overall assets to be divided by the parties,
including both individual and joint accounts.
As part of the ancillary
relief proceedings the assets held by each party
will be determined and it may be necessary for some
money to be encashed and transferred across to the
other party as part of the final settlement.
It is important to ensure that on divorce any bank
or building society account held in joint names
should be closed and replaced with single name accounts
in order to avoid any future problems relating to
signatures for withdrawals.
National Savings and Investments
These investments are offered by the government
and there are a range of different savings vehicles
from ordinary accounts, 5-year fixed interest certificates,
index linked certificates, capital bonds and children's
bonus bonds as well as short term option bonds,
income bonds and premium bonds.
For any assets held within a National Savings and
Investments certificates, the proceeds in the majority
of cases can be transferred in part or whole to
another person on divorce without any implications,
provided that this transfer does not then result
in the new owner exceeding the holding limits.
TESSA
Tax exempt special savings accounts (TESSA) were
launched in January 1991 as five year savings accounts
allowing the investor to receive the interest gross
without the deduction of tax as long as no capital
and not more than 75% of the interest is withdrawn
by the end of the five year term. TESSAs were replaced
by the Individual Savings Account (ISA)
from the 6 April 1999.
It is no longer possible to start a TESSA, however
those accounts that existed at 5 April 1999 were
allowed to continue to maturity. Unlike ordinary
bank or building society accounts, TESSAs require
the individual to lock in the deposit monies for
a period of five years in order to receive the tax
benefits.
As a result of divorce it may be a requirement of a financial order from
the court to transfer part of a TESSA. Where this
is within the five year term an early withdrawal
of capital will mean that all the interest earned
to that date will become taxable. The provider may
also impose a penality for early surrender.
When a TESSA matures the investor is allowed, with
6 months, to transfer the capital of up to £9,000
to a TESSA-only ISA. This is in addition to the
normal annual limits applied to ISAs and any interest
in the TESSA could be used to invest in these limits.
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