Divorcing couples or those who are separating often face major changes in each of their financial circumstances and planning for the future is an essential part of every divorce settlement. An Independent Financial Adviser such as Forward Plan is an excellent resource for couples when they choose to go their separate ways.
As there may be many financial implications in arriving at and with the settlement, Forward Plan can explain your options, help you set priorities, and lead you through the hard choices ahead. We endeavour to make sure our clients understand their options by explaining these in a simple and clear manner.
Where Forward Plan can help:
Divorcing couples can apply for a share of their partner’s pension. However, receiving a share of a partner’s pension in the financial settlement is by no means guaranteed; for example, if a partner receives the family home, it may be deemed that the equity in the property could fund a retirement and so you may not be entitled to a share of your partner’s pension.
There are three ways to receive a share of a pension:
• Pension sharing or splitting – a court can order a pension provider to split the existing pension fund between the couple so that they each have their own separate, independent pension funds.
• Offsetting – the cash value of the pension is included as an ‘asset’ and the other partner is given assets equivalent to that value.
• Earmarking – a percentage of future pension benefits is allocated to the partner. However, if the person with the pension dies, the partner will not receive anything.
Very often decisions need to be made about the family home, such as whether you can afford to purchase your partner’s equity or whether the property needs to be sold and the sale proceeds used to help purchase a new home for yourself. When this happens you will need to know how much can you afford to borrow and what your options are.
Forward Plan charges a minimum fee of £750 for mortgage advice, the precise amount of the fee will depend on your circumstances. For Buy To Let mortgages the minimum fee is £1,000. Commissions received from the lenders for arranging your mortgage can be offset against our fees.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Are your existing endowment policies and/or life assurance and other protection policies appropriate for the future? Almost certainly the answer will be NO as joint existing policies are likely to be inappropriate for you as an individual. If you have an endowment mortgage, you will need to consider whether this is the best method for you to use to repay your mortgage.
You should also think about insuring any agreed maintenance agreement, as this usually stops on death.
Lump Sum Settlements
If you’re receiving a lump sum from a divorce settlement, you may want to invest it to provide you with income now or in your retirement, or a nest egg for your children. ISAs, stocks and shares, bonds and property can be rewarding. All investments may go down as well as up in value, so consider carefully what kind of investment you want.
If you would like help and advice on the financial aspects of a divorce, whether this be a review of the existing marital financial arrangements, what to do with pension rights, looking at mortgages or investing settlements then please contact Forward Plan on 01303 76 76 50.