An early consultation with a financial planner can give you a better understanding of your financial options and help you negotiate a more favourable settlement. Divorce typically involves coming to an agreement about various assets to create a fair division that addresses both your and your ex-partner’s requirements while also making good financial sense. A common and understandable question when going through a divorce is, if you'll have enough money in the future. It's not an easy question, but a financial planner can help by using cashflow modelling to give you an idea of what your financial life might look like. Cashflow modelling puts a monetary value on what you have now and what you might have in the future. Then, it checks this against what you're likely to spend over your lifetime to see if there is a shortfall. Cashflow modelling considers your unique situation and can explore various scenarios to assist you in making optimal decisions. This may include determining the financial viability of retaining your previous marital residence or evaluating the potential benefits of pension offsetting. This tool proves highly effective in guiding you both during the pre-divorce settlement phase and in planning for your future post-divorce. Crucially, it can provide reassurance during a potentially uncertain period in your life.
financial advice early on is a smart move.There are three main ways pensions are handled during a divorce
The amount of income tax and
capital gains tax that you will be required to pay now and going forward with
your new life will change with your marital status. This is a highly intricate
area, but a financial planner can offer guidance to help you arrive at an
arrangement that benefits both parties.
Business Assets in Divorce Business owners might not realise that even an ex-spouse who had nothing to do with the business could be entitled to a share in a divorce. Courts usually treat all assets equally unless there's legal proof otherwise. Courts try to avoid disrupting a business, but sometimes they decide breaking it up or selling it is the only way to divide assets. This can have serious financial consequences for business owners. Divorce might also lead to one party buying out the other. A financial planner can help you understand your options and make wise choices about your business during a divorce.
Investments: Just like pensions, all savings and investments are usually
considered in a divorce. Dividing savings and investments is often simpler than
dealing with pensions, but there are tax implications and charges to think
about, so getting financial advice is a good idea. Remember, tax rates and reliefs are based on individual situations and can change.
Separation, divorce and dissolution
The Divorce Process
Pension Adjustment Orders
When going through a divorce, many people's initial instinct is to hold onto their home, especially if there are children involved. However, it's important to understand that keeping the home might not always be the best financial decision. A financial planner will explore whether keeping your former marital home is truly the right choice for you and your family. For instance, imagine someone getting a divorce who wants to keep the family home. But there's still a substantial mortgage to pay off. After discussing with a financial planner who has used cashflow modelling, it becomes evident that the cost of the mortgage and household expenses matches their income. Any additional costs would have to come from other investments, which are expected to gradually decrease over the next few years. In this case, it might actually be more financially sound to sell the property and buy something more affordable. This move can reduce both personal and financial strain.
In the context of divorce, when
there are children in the picture, their emotional well-being isn't the only
aspect that matters; the financial implications also need consideration. This
often extends beyond deciding whether they should continue residing in the
former marital home. Child support might be necessary, encompassing general upbringing costs or
specific expenses such as school fees. Occasionally, establishing a trust might
be essential to safeguard the children's interests.Moreover, protection against severe illness or death becomes crucial in this
scenario. When child support is reliant on one parent's income, it's easy to
overlook the necessity of safeguarding that income in case the provider passes
away or becomes seriously ill. The absence of protection could place the
surviving parent at unwarranted risk and potentially compromise the child's
quality of life.
After your divorce, you'll be entering a new phase of life, and it's likely that your finances will need a restructuring to fit your changed circumstances. A financial planner understands that to take charge of your financial future during or after a divorce, is crucial to make well-informed decisions based on a clear understanding of your needs. With the guidance of a planner, you'll develop a plan for your new life. However, this plan isn't set in stone; it's adaptable – this is where the ongoing relationship with a financial planner truly shines.
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" Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” Pablo Picasso