Separating and ultimately divorcing from a spouse after many years can be traumatic, especially if there are children involved or assets. In Mrs R's case, she admits that her financial situation is going to be very difficult since she is nearing retirement. The family home must be sold as part of the divorce settlement and she is eager to buy out her ex-husband's half, but needs to raise some finance from her family. "What is the best way to seek finance - loan, gift, part-ownership of the house, etc? I was thinking that if they took a share of the property, on my death this share could be left to the family member or their estate if he/she had died before me. What is the tax situation?"

Property settlement is a key issue in any divorce and Mrs R needs good legal and tax advice if she is to secure the best deal from her ex-husband. She mentions the house, but are there any other assets - a pension fund? Life assurance or savings plans? Our reader does not say whether she has an income to repay a loan from a relative. If she does then a private loan can, of course, be arranged to everyone's satisfaction. If her family is prepared to make an outright gift of money to her, she would be obliged to pay Gift Capital Gains Tax. If she were to receive this sum from a brother or sister, the first £25,120 is exempt from any tax. The next £10,000 is subject to 15 per cent Gift Tax, the next £30,000 to 22.5 per cent tax and the balance to 30 per cent tax. Mrs R's tax liability may be affected, however, by any previous inheritances she has received from any sources, including her parents.

If a family member lends her the money for her lifetime, there is also likely to be a tax implication both for herself and for the heirs of the person who makes her the bequest. The Revenue uses a complicated formula to work out the taxable benefit of gifts given or willed for a person's lifetime only and she should consult an accountant or solicitor before coming to any arrangement.