A reader asks: ‘How do I advise my divorcing dual UK-US citizen client to split his pension?’
This is one of those questions that UK-trained and UK client-focused advisers who only look after American expat clients occasionally say they come up against from time to time – and often end up having to consult an American wealth management specialist, in order to know how to respond.
It concerns the splitting of the assets of a married expatriate American couple, after they have been living abroad for more than a decade; have acquired dual citizenship – in this case, British and American – so that the couple can be free to enter into other relationships if they choose to.
In this instance, the couple, both American by birth, were married 25 years ago in the US, and came to the UK in 2001. The adviser who posed this question is based in the UK, and we decided to seek out an American expatriate advice expert for an answer: R. Stanton Farmer of Madison, Wisconsin-based Thun Financial Advisors (pictured, below).
Below is this London-based adviser’s query in full, followed by Farmer’s detailed response.
“Splitting the husband’s UK pension has proven easy: the pension scheme administrator is happy to take a divorce decree from a UK court.
“But the husband’s US pension is proving far trickier, and has been holding up the divorce, the couple tell me, for years.
“The manager of this gentleman’s US pension, Vanguard, wants a US court order, which would involve considerable expense on my client’s part, I am told: ‘tens of thousands of dollars’ was the quoted amount.
“What I wanted to know is whether there is a way to split my client’s U.S. pension without having to obtain a court order – perhaps by using some kind of fund wrapper, through a company like Pershing?
“The client is also insistent that it be done without incurring tax, or significant other charges; I have told him that I believe this should be possible.
“What would you suggest?”
For R. Stanton Farmer’s response, see page 2.