My background: I am a British citizen, currently living in mainland Europe i.e. Austria. Off-late, I married an Austrian Citizen. We purchased a property together in Austria. There is no Prenup arrangement in place – The Austrian Notars and Lawyers advised that this exercise would be futile as should a divorce occur, the decision rests entirely with the Judge.

My family background: My parents have a few Assets i.e. Liquid (Capital) and Physical under their belt. My parents have a pension/Health insurance in place and sufficient Capital to survive should any illness overcome them. My parents (living in the UK) are a decade away from official retirement age.

Background on Query:

  • I am reluctant to accept any assets from my parents as gifts as a I perceive these as a risk in the event of a divorce. We have spoken to a lawyer and an external financial advisor who advised us on setting up a “Trust” and nominating a “Trustee”. Said lawyer and financial advisor also mentioned that total fees payable would be minuscule as compared to inheritance taxes.
  • My parents agreed that their assets remain within the family and get inherited by children, grandchildren, etc. So, in theory we intend for all assets to form part of the trust – Liquid assets (Capital) or any income derived from Physical assets would form part of the Trust.
  • I understand that any capital withdrawal from said pot/ Trust, would be taxable.Is this correct?
  • At some point, I intend to include my assets gained over the next few years as part of the Trust. In the event of divorce from my wife, would she be entitled to a part of the inheritance included in Trust from my parents?

This brings me to my query:

  1. Do Trusts work – Is the information mentioned in above section correct? Is my understanding correct?
  2. Are there any flaws/ risks involved in Trusts? What would happen in the instance the “Trustee” goes under administration/ declares bankruptcy? Is the Trustee a “Law firm” or can we nominate multiple individuals within our family as ”Trustee”?
  3. When my parents fall sick/ require old-age care / Medical care and should the capital be exhausted, what would happen at this point? Obviously, I am there to support my parents, but should I not be around i.e. dead, disabled, etc., what would happen in such an instance to the Trust? Would the trust be taken over by the Government?
  4. In the event of divorce from my wife, what would happen with the Trust?
  5. Is there a better option other than Trust, which is exempt from being divided in the event of a divorce?

I personally do not believe that you can get away scot-free without paying inheritance or any form of tax!

Thank you for your time and effort.

  • 3
    Sounds like your wife is plotting against you. Better take pre-emptive action. – Five Bagger Jun 6 '17 at 12:21
  • hahaha. Not really. My wife is all good. But, its best to be safe than sorry- - the best way to have been safe is not getting married. Anyway, me losing half my wealth in divorce is acceptable. However, losing even a penny from my Parent's earnings is not acceptable. The intention is to pass the assets down the generations. – Seb_aj Jun 6 '17 at 15:25

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.