This content is for information and educational purposes only. It should not be taken as financial advice or investment advice. To receive tailored, regulated financial advice regarding your affairs please consult us here at Hanson Financial Services (financial advice in Liverpool).
Divorce is an emotionally-charged and difficult subject. It is immensely stressful on the people involved and it is easy to make irrational decisions in the heat of the moment. This leads many to see the benefit of a lawyer to help navigate the legal process. Yet what about a financial planner? After all, your financial settlement will have a huge impact on your life trajectory.
In this article, our team at Hanson Financial Services (financial advice in Liverpool) shows how a financial planner can be an invaluable resource during – and after – the divorce process. We hope you find this content helpful and invite you to contact us if you’d like to speak to us about your own situation.
The limits of lawyers
Most lawyers will have an understanding of the financial aspects of a divorce, their expertise is focused on explaining the divorce process to you and your options at each stage. They can help with legal issues that arise and represent you in court, if required. Yet he/she will likely not have a firm grasp of how the divide of assets will affect each person’s financial prospects ahead.
Here, a financial planner can be immensely helpful. They can advise on a wide range of matters including tax, pensions, mortgages and investment options. This is often crucial during a divorce process, since assets cannot be reallocated after the financial settlement is reached. Untangling all of this can be complicated even setting aside the heated emotions which can often cloud a person’s decision-making. A financial adviser can help set everything out more clearly.
How a financial adviser can help
There are many concrete ways where a financial adviser can help in a divorce. These include:
- Mediation. During acrimonious divorces financial advisers are playing an increasingly important rule in the meditation process. Alongside lawyers, these advisers can help to steer discussions in a more pragmatic direction – especially on financial matters.
- Assessing everyone’s finances. Sadly, during some divorce processes there is little love or trust left between the parting partners. This can lead individuals to withhold assets (e.g. pensions and investments) which might otherwise have a big impact on the final settlement. A financial adviser can help unearth these and ensure a fair settlement.
- Pensions assistance. Pensions are often overlooked during the divorce process. Yet they can be the second-most important asset (after the family home). Discerning the value of the pension(s), however, can be difficult. A financial adviser can help with this.
- Tax and mortgages. After a divorce, the former spouses will find themselves in a new financial situation which can bring challenges. A financial adviser can help you navigate this landscape more effectively, possibly helping you produce more disposable income for saving and spending by optimising areas such as your tax and mortgage.
Common steps to take
In many marriages it is common for one spouse to “deal with the finances”. This might work fine during the relationship, but it can leave the other person in the dark about the assets if divorce transpires. Here, it is crucial to get organised and to make a list of income and finances – yours and that of your spouse. Both of you will need to fill out a financial statement (Form E) during the divorce proceedings, which declares the assets to be split. Bringing a list to this part of the process can make everything a lot easier.
Another key step is to re-evaluate your financial goals. During your marriage or civil partnership you likely shared a common vision of the future – in which you both featured. After the divorce, however, this vision is no longer viable. Instead, it will be just you and maybe some dependents (e.g. children who you share custody with). To get through this difficult process, it’s important to try and imagine a positive alternative future for yourself – where you are happy and thriving. Try to discuss a new set of financial goals with your financial adviser, which you can start pursuing once this process is over.
Finally, if you still own a home together, think carefully about how this will feature in your future. Many individuals seek to retain their house during a divorice – perhaps giving this up for a share in any pensions. This is often a big mistake, as your income will likely be lower after the divorce and this could make it unsustainable to keep up your previous lifestyle in your old home. It may be better to take a share of the pension(s), sell the house and move into a cheaper place which you can afford after the divorce. This might let you retain a healthy level of disposable income each month which can then be used to rebuild your financial position – e.g. by putting some of it into an investment account or pension.
Conclusion & invitation
Are you interested in talking to a financial adviser about your pension and investment planning needs? We’d love to assist you here at Hanson Financial Services.
Please contact us to arrange a consultation with our team – free and without obligation – to gain more clarity and peace of mind over your financial plan.
You can call us on:
Liverpool Office: 0151 708 7616
Manchester Office: 0161 401 0991
Chester Office: 01244 960 039Or email via: [email protected]