Your divorce settlement may not be as expensive as that of Bill and Melinda Gates’ but that doesn’t mean you needn’t protect your wealth.
The introduction of the “no-fault” divorce rule, that came into force in England and Wales in April, means it’s more important than ever for divorcing couples to understand the effect that separation could have on their finances and retirement plans.
The removal of the blame game allows those committed to sorting their divorce amicably to do so through mediation, often with a financial planner to assist both parties in divorce cases.
Whether it’s a separation or divorce, we provide expert financial planning advice that helps make sense of things and sets you on the path forward, whenever you’re ready.
Read on to find out four ways working with a planner can help.
1. Divide your largest assets with care
Many people don’t realise that a pension is considered a joint asset in a marriage. This is the case even when only one spouse has accrued pension savings.
Sometimes, pension funds can be worth even more than the house you share. So, it’s important that both sides consider any pension assets, and that these are distributed fairly.
We will help you understand what the options are and give impartial information where required.
2. Prove that you can take on the mortgage
One of the biggest concerns that many separating couples face is the question of who should remain in the marital home and take on the mortgage.
If you decide that you want to take on your home when dividing assets, it’s important that you can cover the costs of your mortgage repayments.
We can assist you with calculating the borrowing capacity of any party and help you understand the effect of different levels of deposit, equity, and maintenance.
Things such as how benefits will be assessed and what term the mortgage should run to are important factors to consider, as well as the affordability assessment of different lenders. We can provide a professional mortgage capacity report for you to use in your divorce proceedings.
3. Ensure you still have the right protection
Life cover is often overlooked in the divorce process.
There could be joint policies that result in one party losing their cover or trust arrangements. Or you might need to consider what would happen if one party dies and the maintenance stops.
We can help to identify the policies you have and guide you through things like separation options, trusts and trustees, and other types of protection, such as critical illness and income protection.
4. Plan a budget and forecast the future with cashflow planning
Identifying a clear budget at the outset is possibly the most important part of the divorce process, as it will help you understand the requirements over the long term.
Things such as inflation, changes in interest and mortgage rates, changes in benefits, and increases in the State Pension Age will all affect your long-term needs. We use the latest financial forecasting software to assist with the understanding of the long-term requirements and the impact of all these factors.
Taking advice early in the process is essential
It’s vital that both parties understand the financial effect of divorce and how the different elements fit together, so that both parties have a good outcome.
We provide information and guidance throughout the divorce process, whether that be collaboratively or in mediated or traditional settlements.
Taking advice early in the process is essential because, regardless of which process you choose, your financial situation will be at the centre of the negotiations.
Get in touch
If you’re getting a divorce or considering your options, get in touch and we’ll provide financial advice and support. Email contactme@kbafinancial.com or call us on 01942 889 883.
