Figures from the Office for National Statistics have revealed that overall divorce rates are at their lowest level since 1973 – yet the separation rate among older couples is continuing to rise. So just how can you protect your financial assets during what is surely the most difficult time in your life?
Managing your finances after a divorce needs careful consideration, says Roy Durrant, a Resolution Accredited advisor at Just Financial Planning. “The best starting point is to get your bank statement out and go through an expenditure schedule, listing all of your normal outgoings. You then need to think about things that may be paid annually, as well as any future capital expenditure. We advise our clients to then add 10pc as a contingency.”
Most financial advisers will have a standard schedule to help with this, and we at Just Financial Planning can certainly help our clients to achieve this, says Roy. Seeking out the help of a trained financial advisor can help put your mind at rest – especially if you are worried that your money might run out. “Consider going through a cash-flow analysis if this is the case,” says Roy.
When it comes to separating your assets bank accounts, credit cards, stocks and shares will all be taken into account, as well as the marital home. “The primary consideration will be based on needs,” says Roy, so if one party has child care responsibilities then they may need a higher share of the matrimonial assets in order to provide housing for the children involved.
How much will be shared will depend on the length of marriage – for a long marriage, this is likely to be split 50-50. “A different split may be applied for short marriages or where one party has made a larger contribution to the matrimonial assets due to their own exceptional talents or abilities – for example, if one party was an exceptionally gifted songwriter,” adds Roy. But it’s important to remember that the family courts have wide-ranging discretionary powers when it comes to reaching a settlement.
As a result of a separation, the matrimonial home may need to be sold so that each party can re-home themselves, says Roy. “If one party has a higher mortgage capacity then this may affect the percentage of the share granted to the parties on divorce,” Roy explains.
Who can help?
When it comes to reaching a financial agreement, lots of help and advice is available. A resolution specialist is a specially trained financial adviser who is experienced in helping couples to separate complicated financial affairs, while a mediator can help a couple to work out an agreed divorce settlement. The mediator is neutral and paid and instructed jointly by both parties to the divorce, and helps to facilitate a joint meeting, where both parties will work together to agree a settlement. You can find a financial or resolution specialist, or check their qualifications here.
“If a settlement is agreed then a report will be prepared by the mediator which can then be given to a solicitor to draft the Consent Order,” explains Roy. A Consent Order is a professionally prepared document which helps a couple to achieve a clean break.
While legal advice is not, technically, necessary, it is advised. “I would recommend getting legal advice even if it’s just to prepare the paperwork once you’ve agreed the terms of the settlement,” advises Roy. “I suggest talking to three solicitors to see who you feel comfortable with – details of these can usually be found online, and the Citizens Advice Bureau can also help to provide useful information.”
Once a financial agreement is put in place, it’s natural to want to rebuild your assets – something an experienced adviser at Just Financial Planning will be able to help with. “If there is sufficient surplus income to do so, then savings and pensions can be rebuilt, post-divorce,” says Roy. “It is also important to get professional advice on how your existing savings and pensions are invested to ensure they are working as hard as possible – but without more risk than you are prepared to take.”
As part of its service, Just Financial Planning offer a free consultation. This will allow you to have a clear and confident conversation about your situation and your financial goals, and an experienced financial advisor will be able to show you what they can do to help.
As a potential client, you will then receive a follow-up quote for future services, where you and a dedicated advisor can work together to settle your mind on all sorts of financial matters, from resolving a dispute and protecting your assets to helping you plan your future retirement.