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Pensions and bankruptcy


In the recent case of Horton v Henry (2016) the Court of Appeal has unanimously confirmed an earlier decision that the Trustee in bankruptcy does not have power to require a bankrupt to draw in any way from pension funds not yet in payment. This has reversed the previous position thought to be the case following Raithatha v Williamson (2012) in which the court had ruled that a bankrupt's entitlement to take pension benefits was capable of being part of his "income" for the purposes of insolvency legislation.

 

The effect of this in family proceedings is to ensure that although considerable efforts may need to be taken to deal with the Trustee's interest in relation to many of the assets of a bankrupt party within divorce proceedings there is no such need in relation to pensions. As such pensions will remain open to all available orders within divorce and may make available either lump sums or income that might otherwise have been believed to be unavailable.

 

Any bankrupt or potential bankrupt facing the possibility of divorce proceedings should take advice on how to factor this decision into the financial arrangements within the separation and certainly a bankrupt's spouse should make sure that their lawyer is clear on the implications of this important decision.

 

Ian Stirzaker

 

Ian is the Senior Partner and Head of Family Law at SME Solicitors. Please contact him or Joanna Gardner for specialist help and advice in all aspects of family law at  ian.stirzaker@smesolicitors.co.uk or joanna.gardner@smesolicitors.co.uk

Added: 20 Feb 2017 11:25


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