Financial Planning on Divorce

Using Financial Planning to help you with your divorce

Making the decision to divorce can be a highly emotional and painful process and agreeing a fair financial settlement can be a stressful, complex and protracted exercise.

Our team of specialist financial planners will help you assess your immediate and longer-term financial needs during your divorce, guiding you to make the best decisions possible regarding the distribution of assets for your peace of mind and financial security.

Questions we can help you answer

Lifetime financial forecasting can help answer one of the biggest and most important questions as you begin reviewing your joint assets when going through a divorce:

  • What’s the best way to split our assets?
  • Where will I live, and can I afford it?
  • How much money will I need each month?
  • Do I need to make a new Will and/or change my Lasting Power of Attorney?
  • What happens on death or diagnosis of a serious illness?
  • How can I plan for my retirement?

Losing your partners workplace benefits

A financial settlement invariably focuses on the values of assets and liabilities but what is often overlooked is the loss of employer sponsored benefits such as:

  • Death in service life assurance
  • Private medical insurance
  • Use of a company car
  • Discount schemes for retailers

Valuing your pensions

After a home, pension funds are often the second-largest asset owned by a couple and whilst there are several ways to split a pension, achieving a fair resolution can be a very stressful process. This is especially true when the care of children and other dependents is involved.

Pensions aren’t always as straightforward as they first appear. It’s common for individuals to have multiple pensions such as a workplace pension, personal pension, and state pension. Some offer guarantees which can make them more valuable than first thought and for others, the cash equivalent value (transfer value) may not reflect their full market value.

Where a Pensions on Divorce Expert (PODE) report has been obtained, we can work with you to help you understand how any recommendations impact your financial position post-divorce.

Lifetime financial forecasting

Lifetime financial forecasting, also commonly known as cash flow planning, is a useful tool to help you make informed decisions about your finances and make sure you stay on track to achieve your goals.

We will be able to demonstrate the impact of any proposed financial settlement on:

  • Your immediate and future income/ capital requirements
  • The level of risk you will need to take with your investments and pensions
  • When you can expect to retire and how much you might have to live on
  • What else you may need to do to make sure you don’t run out of money

The sooner you have this information the better as it means you are best placed to fully understand what the financial settlement will mean for your future.

Expert financial advice you can trust

Whilst we can help you at the start of your divorce proceedings, we can continue to add value and reassurance throughout your lifetime by regularly reviewing and updating your financial forecast to take account of changes to your personal circumstances. This will make sure you remain in the very best position to make informed decisions about your finances.

Our approach is engaging and interactive and when combined with quality financial planning advice, will give you freedom over your financial future as well as the confidence knowing you have the best chance of achieving what you want in life.

We can work with you remotely, at your home or place of work, or you can visit us in one of our nine offices.

Get in touch with us today to find out more about how we can help you with your finances following divorce proceedings.

Book Consultation

To book your initial consultation (no cost or obligation), please fill in the form below with your details and one of our financial planning experts will be in touch.

“I have been delighted not only with the standard of advice, but also with the administrative back-up of Francis Clark. The three key elements for me in a financial advisor are trust, empathy and good communication skills and Ian ticks all those boxes and more.”
Client, Exeter
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Retirement Planning FAQs

  • What is the difference between a defined contribution and defined benefit (or final salary) pension?

    A defined benefit pension (also known as a final salary pension) is usually set up by your employer. It guarantees you a regular income in retirement, usually based on your salary and the number of years you have worked. The level of income may also increase in line with inflation.

    On the other hand, defined contribution pensions do not offer you a guaranteed level of income. The amount of money you will have in retirement depends on how much you or your employer has contributed and how well your pension investments have performed.

  • How much can you pay into a pension?

    Usually you can pay as much as you earn each tax year into your pension, up to a maximum of £40,000. This is your annual allowance.

    The allowance reduces for people with an adjusted annual income of £240,000 or more, down to a minimum of £4,000. This is known as the tapered annual allowance.

  • What is the tapered annual allowance?

    The usual £40,000 annual pension allowance is cut for people with an adjusted annual income of £240,000 or more. The allowance reduces by £1 for every £2 of income above £240,000, down to a minimum of £4,000. This is known as the tapered annual allowance.

  • What is pension carry forward?

    Pension carry forward lets you pay more than your annual allowance into your pension by ‘carrying forward’ unused allowance from the previous three tax years (as long as you have sufficient earnings). You still will receive tax relief on the payments and it can be useful for those affected by the tapered allowance.

  • What is the lifetime allowance and how much is the tax charge for breaching it?

    The lifetime allowance is the amount you can hold in your pension over your lifetime. The allowance is currently at £1.0731 million. Your pension is assessed against the allowance when you take benefits, die or reach age 75. Any excess is taxed at 25% on top of Income Tax if taken as income, or 55% if taken as a lump sum.

  • What are the tax benefits of pensions?

    Investments in pensions grow free from Income Tax and Capital Gains Tax. Pension contributions are paid from gross (pre-tax) income. Where tax has already been paid on a pension contribution it is refunded. The taxman will automatically top up pension contributions up to your annual allowance by 20% to cover basic rate tax. Higher or additional-rate taxpayers can then claim back any higher or additional-rate tax that they have paid on contributions through their tax return.

  • What are your options for taking an income from your pensions?

    You can normally take up to 25% of your pension tax-free – either as a single lump sum or as a series of smaller withdrawals. You can also take a regular income from your pension by making lump sum withdrawals, buying an annuity or setting up income drawdown.

  • What happens to a pension when you die?

    A defined benefit (final salary) pension will usually stop paying an income when you or, if your pension income passes onto a dependant, your dependant dies. A defined contribution pension can be passed on to your beneficiaries. If you die before the age of 75 the pension will be passed on tax-free. If you die after 75, your beneficiaries will pay their usual rate of Income Tax on any money taken from the pension.

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