Giving up your pension in the event of a divorce? Be aware of potential gift tax

In divorce cases, it is often agreed that one of the partners will waive their pension rights. This sometimes seems a practical solution within the overall settlement, particularly when a property, assets or a business also need to be divided.

However, this now requires extra attention from a tax perspective.

In practice, pension entitlements are often included in broader agreements concerning, for example:

• the family home;
• savings and investments;
• business assets;
• maintenance payments;
• other assets.

This is precisely why it is important that these agreements are properly assessed and recorded, not only from a legal perspective but also from a tax perspective. After all, a balanced division on paper does not automatically mean that there is no tax risk.

Our advice:

• always include pension arrangements in the overall financial analysis;
• ensure that any compensation is clearly documented;
• avoid arrangements that could subsequently be interpreted as a gift.

A divorce is not just about the arrangements for today, but also about financial peace of mind and tax clarity for the future.