Divorce and Seeking Financial Advice

It’s never a subject while facing this particular outcome many feel easy discussing, however, with divorce rates in England and Wales rising as they are today, it certainly should be addressed.

While divorce brings difficulties in family life, it can also put an overwhelming strain on personal finances. A major life-changing experience is occurring while you grapple with the emotions. Therefore, in light of the newly released figures from the Office for National Statistics (ONS) – advice on how affected individuals can protect their finances long-term, is crucial.

Divorce rates rose in 2019, and according to the Office of National Statistics, there were 107,599 divorces of opposite-sex couples, which is an increase of 18.4 percent on the figures for 2018.

Going through a divorce will be incredibly difficult no matter what your situation or background – and can be made even more complicated by financial settlements. This can be largely due to how the divorce process can be lengthened by financial circumstances which tend to become tangled up in the legal proceedings. Fortunately, there is guidance on how this can be minimised so people can protect their long-term finances during a divorce.

Most people are likely aware that a lawyer will be needed to make the divorce process go as smoothly as possible. However, having a Financial Adviser in the mix will help you to understand your financial situation, which in turn helps ensure that you receive the correct amount of money, along with other assets that you may be entitled to.

Where a divorcing couple are seeking to collaborate to get the best outcome for everyone, a Financial Adviser can act as a neutral party, giving guidance, but not advice.

Once the divorce is settled, a continuance with your Financial Adviser will take you to the next step, which is the management of your financial affairs. To keep a similar lifestyle after your settlement, it’s important to understand how much you require day by day. By monitoring your outgoings on a daily basis, including larger bills and the possibility of future expenditures such as university fees – it will give you a goal to aim for at the negotiating table. Settlements can come in two forms – an upfront lump sum or an agreed amount paid over a period of time.

With the option of periodic amounts paid out, your Financial Adviser will help with every step of your wealth management process by calculating the amount you will need for your family’s future, and take into account any variables that you might not have considered. This calculation will be key in working out whether any monthly maintenance that’s offered will be enough, for today and in the future.

Your Financial Adviser will also look at the lump sum option. Using a budgeting forecast they can project spending alongside future interest rates and inflation, this will allow your Adviser to calculate how much cash will be needed in the long-term along with a variety of lump sum investing options.

It is therefore advisable to get in touch with a Financial Adviser early in the process. If the Financial Adviser is brought in after an initial financial settlement has been agreed upon, a financial lifestyle opportunity could be missed. Then there’s the whole pension side of things. An important aspect that many couples can gloss over or forget about completely – but shouldn’t.

A person’s ability to build up their pension pot during their working life in the hope of retiring comfortably is ongoing. So, don’t forget about them should your marriage end. This might include the complex matter of splitting pensions without either person breaching annual or lifetime pension allowances. 

For the wives – your husband may hold a much larger pension pot than you, and when you were happily married you no doubt assumed, you’d grow old and grey together. That’s why a pension should also be considered as part of the financial settlement. This alone highlights the absolute importance of seeking advice from the very start, as property can be offset against the pension amount also, if agreed upon.

A financial adviser will help you to decide what the best outcome would be to ensure you are protected financially for the long-term. Without financial advice, the complex process of divorce could leave you financially vulnerable for many years and may also leave your family unprotected. 

On paper alone, going through a divorce can be difficult, that’s why trying to handle it all by yourself is incredibly stressful, and not advisable.

If you are taking sensible and constructive steps in order to protect yourself financially, you’ll find yourself in a better financial position post-settlement and long into the future, as you begin the journey of your new life.

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