Jill Kerby

Will my husbands debt cost me my family home?

AC writes from Dublin: My husband and his father gave a personal guarantee to a bank for a business loan. It's now in default, and with interest ratcheting up is worth nearly €2 million. They have sold a number of properties over the last two years which seemingly put a sizeable dent in the capital owed only to get swallowed whole again by interest due. This happened before we married, and I knew nothing about it until he told me a year later when the worry got too much.

I owned my home, mortgage free, when I met him. After I married, after he told me about his personal guarantee problem, I sold my house and used the money to renovate and extend an old house my parents gave me. This is now our family home. We have two children. This house is in my sole name, it was a gift from my parents, all CAT returns filed etc.

“The devil is always in the detail,” says solicitor John Horgan of Leman Solicitors in Dublin, “but if a) the property is in your reader’s sole name, b) the debt is in her husband’s name and his fathers’ and c) she has not signed any documentation in relation to their loans - mortgages, personal guarantees etc then the bank has no contract with her and no security over her house.”

Your question is sure to trigger other readers’ concerns about what happens to the family home when it is owned by both partners and one of them is in serious personal debt, or has used the family home to secure a separate loan or is perhaps even facing bankruptcy. 

In anticipation of this I suggest such readers familiarise themselves with the Family Home Protection Act 1976 and the Family Law Act 1995. At the core of these acts is legislation that prevents one spouse from selling, mortgaging, leasing or transferring the family/shared home without the consent of the other spouse/civil partner. Where that consent has been given under duress or under false conditions, the family home may not necessarily be lost to creditors.

The money website askaboutmoney.com also has a ‘key post’ (http://www.askaboutmoney.com/showthread.php?t=162672) that discusses a number of family home related debt matters, but it includes the caveat that readers also consult a solicitor. 

Diminishing return

PS writes from Dublin: Recently you replied to a JO'B from Dublin regarding Irish taxes on UK share dividends. You stated that a UK dividend of €1,800 would have resulted in tax of €200 at source and, if the Irish owner was paying tax at 41%, "their liability on the €1,800 would be €738".

Am I correct in assuming what you meant that the tax was €738 less what was already paid to the UK authorities, leaving a balance of €538 payable in Irish tax? Would you mind clarifying this for me?

I’m afraid that you read my answer correctly the first time. The taxing of UK share dividends here is not very generous: first, UK dividends are paid to the Irish shareholder net of a UK withholding tax. The dividend voucher you receive will show a tax credit that is the equivalent of 1/9th of the net dividend, but the withholding tax is not refundable and if you are a top rate 41% taxpayer here, your tax bill on the dividend example I gave of €1,800 (the actual gross dividend being €2,000) is €738, that is, 41% of €1,800.

Paltry pension

S McG writes from Dublin: From 1961 to 1965 I worked on and off in England and made National Insurance contributions for a total of 211 weeks treated as insurance periods. I returned to Ireland in July 1965 to take up employment in the civil service where I remained for 41 years. On reaching age 65 I applied to the International Pension Centre in Newcastle Upon Tyne for payment of a pension on the strength of those years of insurance. I was informed that, as I am in receipt of an Irish civil service pension I am not entitled to a pension from the UK, however, I then received an amount of £0.71 per week that arrives as an annual payment each December.

As my period of employment in the UK had no connection with my later employment in Ireland I fail to see how my Irish pension should in any way affect my UK entitlements. Your comments would be appreciated.

As a retired Irish civil servant, your civil service and state pension entitlements are combined. A spokesperson for the Department of Social Protection told me that your Irish pension is administered by the Irish Paymaster General, not the Department of Social Protection, but she did add that your status as an ex Irish civil servant should have no effect on whether you are entitled to a UK state pension for the years you were employed in the UK.

However, in order to qualify for even a partial UK state pension, men who were born before 6 April 1945 need to have paid at least a quarter of the required 45 years of qualifying national insurance contributions (NICs) for a full pension; and for those born after that date, a quarter of the 30 qualifying years of contributions. With fewer than 25% of the qualifying years worth of contributions, you will not be entitled to any basic State Pension using your NICs record. (See http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_10014671)

Nevertheless, you are receiving a UK pension payment of £0.71p a week, or £36.92 in total every December. 

The Department of Social Protection spokesperson suggests you contact the Paymaster General about your case. Perhaps they can shed some light on the size of your UK state pension. You may then have to re-contact the International Pension Centre at Tyneview Park, Newcastle Upon Tyne to double check the numbers of contributions they attribute to the period in which you worked in the UK. Their telephone number is 0044 191 218 7777.