Divorce and Separation Advice
Getting financial advice on divorce or separation can help you manage your future finances with confidence, and answer questions during the process.
What Does A Good Financial Adviser Do?
For those who are unfortunate to have to go through a divorce, facing up to money can be a cold experience.
Pensions and ISAs may make you want to sleep. But divorce does risk financial meltdown, and we can help give you confidence in your finances – knowing what your assets and debts are, the value of your home and pensions, your income, paying the bills and the mortgage. Playing ostrich tactics won’t work! But working with us we can help understand true essential and the difference with lattes… No need to feel any shame or failure – just rebuilding your finances as an excellent focus.
My advice is to reconcile finances as quickly as possible, without legal wrangling, and base everything on a 50 50 split at least to start with.
Never ever be afraid of talking about finances – it's one of the major reasons why the gender pay gap exists – so break the ceiling and have a confidential chat rather than say “Oh I don’t understand money!”. Research has found that it’s home-owning women in their 40s who are most likely to have money problems, much less likely to invest than men are (one study finding men hold double the amount of investments).
If you feel that you don't know your full financial picture, are worried about something in particular, or really want to get financially secure, then ask us to help.
We can put investments, insurances, mortgages, Wills etc together for you, once we understand your objectives and circumstances - the things you want out of life and when (being realistic).
We Answer Your Questions
No matter how seemingly silly or difficult, our aim is to answer your questions and give you confidence about our professional work.
The range of things you will need to be thinking about are; how to divide any money you share, what happens to the home, how to get a new home, and where do any children live.
Our role is to focus on dividing up money you share - including pensions, what happens to the home, getting new mortgages, and all other things financial.
We are regularly asked to help with obtaining a new mortgage, dealing with the existing mortgage, looking at the value of investments and pensions, and helping budget for the future.
Take the stress out of divorce and separation finances, with independent financial advice. We'll help you look to the future with security.
For us, a good life means enjoying experiences and opportunities. Have you ever said - "one day I would like to…"? - well now is the opportunity to plan and enjoy yourself!
Ian is a fully qualified member of the Personal Finance Society, since 1994. He has built his expertise with numerous qualifications and professional development each year.
Pensions and Divorce
We have come a long way since the initial legislation governing pensions and divorce was developed in 1973 via the Matrimonial Causes Act.
The upshot is that there are now three ways of addressing pension wealth in a divorce situation, each with their upsides and downsides.
The first method is to offset the value of the pension rights against a calculation of the value of other matrimonial assets, keeping pensions intact.
In many ways this is the simplest method available – it creates a clean break and, where both partners are reasonably well off, can be an effective approach. It is often used where overseas pension assets are involved to avoid the complications these create.
However, offsetting can throw up many challenges for the less well-off partner, particularly in relation to working out how to preserve any capital and indeed how to eventually turn that into a retirement income.
This refers to an attachment order made by the court, which requires a proportion of the pension benefits to be paid directly to an ex-spouse instead of to the member.
Before the most recent legislation came into force in 2000, this was a more common method of sharing, however it is little used now due to its significant downsides. For instance, the benefitting spouse could lose their entitlement if they remarry or, depending on the details of the pension scheme, once their ex-partner dies.
Needless to say, it definitely doesn’t produce a ‘clean break’.
This option, now two decades old, is an acknowledgement by the state of the complexity of pensions.
The aim of pension sharing arrangements, generally requiring a court order, is to calculate the value that needs to be transferred to allow a spouse to achieve equal value or income by becoming a member of the pension scheme in their own right with the benefits shared between the two parties or transferring it into their own pension scheme. This has the obvious benefit of not being tied to the other spouse’s retirement date, enabling both parties to act independently in the future.
As with everything, though, there are some drawbacks. Not least, it affects the recipient’s lifetime allowance (LTA), that is, their ability to add additional funds – meaning high earners must take particular care.
Property v Pensions – Dispelling the Misconceptions
We still see instances of spouses without significant wealth veering towards the offsetting property route with little regard for the wealth contained in a pension.
While a family home could be worth perhaps £500,000, a pension from a long-serving employee could be worth more.
We aim to bring common sense to bear in making clear the best decision for the long-term.
Planning for the Future
Finally, once the settlement has been agreed there is the essential role of implementing the plan.
For the less well-off spouse a key consideration is likely to be when they can afford to retire. The better-off partner, on the other hand, will likely be considering how to rebuild their pension.
Divorce isn’t easy, but it is common. Independent financial advice has an essential role to play for clients in helping understand their situation, and choose the best options from there.
Ian Francis is a fully qualified member of the Society of Later Life Advisers, having demonstrated his professionalism in giving advice for those clients looking to the future and undertaking professional qualifications, as an independent financial adviser.
Ian is also a fully qualified member of the Society of Later Life Advisers retirement advice standard. He has built his expertise with numerous qualifications and professional development each year.
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