Home / Lifetime Giving and Divorce: Protecting Family Wealth in Changing Tax Landscapes
11th June 2025
Paul Bricknell, Head of Tax & Estate Planning
From April 2026, trading businesses will lose their total exemption from Inheritance Tax (IHT), and by April 2027, pensions are also set to become part of the IHT net. These legislative changes are driving a renewed focus on lifetime giving as a means of effective estate planning and tax mitigation.
However, one concern continues to arise for many families considering substantial lifetime gifts: the risk that assets gifted to children could be lost in the event of a future divorce. Understandably, the idea that 50% of a gift might be lost through a financial settlement can deter families from making any gift at all—despite the certainty of a 40% IHT charge if no gift is made.
The good news is that with the right legal advice, lifetime gifts can be structured to offer significant protection in the event of a child’s divorce. Tools such as trusts, pre- and post-nuptial agreements, and share ownership restrictions can be used in combination to ensure that gifted assets are ringfenced from any future financial claims.
In recent years, we’ve seen a marked increase in parents making gifts conditional on the recipient entering into a pre- or post-nuptial agreement. These agreements can clearly define ‘family’ wealth and ensure that inherited or gifted assets are excluded from any future divorce settlements.
At Kuits, our Private Client and Family teams work closely to provide seamless, integrated advice. This collaborative approach ensures that strategies designed to mitigate Inheritance Tax also include the necessary safeguards to preserve wealth across generations, even in the face of family breakdown.
Whether you’re considering making a lifetime gift or are concerned about how best to structure family wealth for future generations, we can help.
To discuss how lifetime giving can be used to reduce Inheritance Tax while safeguarding family assets from potential divorce, speak with a member of our Private Client or Family teams.