How Fraser Heath can help with your Divorce

Divorce can be one of the most stressful periods of your life. Daily routines change, you suffer the loss of significant relationships and possessions, and you strive to seek a new identity as an individual. A financial planner can help you start to regain the control in your life by helping you plan your finances ahead for the future and to help increase the chances of arriving at a settlement that addresses your long-term financial needs.

Financial planners are experienced in helping clients plan for the future. We do this firstly by analysing your assets and debts, and your income and spending habits. By helping to organise your assets in an efficient manner appropriate to your attitude to risk we can project your cash flow long into the future.

This process is ideal for people suffering the devastating financial affect and uncertainty of divorce. We can work with you to understand and interpret how the divorce might change your lifestyle and factor this into the cash flow forecast.

It is occasionally the case that on divorce one party is inexperienced with finances and help is needed to inform and educate on personal finances. Where lifestyles have been supported by loans and credit cards, the impact on finances post divorce can need very careful planning and help to understand the impact on lifestyle.

We can help you to understand and fairly evaluate all of your assets. We can make suggestions on how the assets can be split in a manner that ensures the settlement offers you the fairest and most appropriate prospects for your future.

We can help you better understand the financial realities of your situation, create reasonable expectations, and help you feel secure with the fairness and adequacy of the outcome of your divorce. We can play a crucial role in guiding you toward rational decisions and successful negotiations.

We can contribute factually, but more importantly, holistically as well. We provide expert financial analysis and strategy but take care to tailor it within the legal framework. We perform our work in a way that enhances the decisions you make with your solicitor by making them more powerful and enabling you to plan ahead for your own future.

Collaborative Law – For people who want to control their own futures

While a financial planner can help you through your divorce, there is also a role for a financial planner to play if you decide to opt for a Collaborative divorce.

A Collaborative divorce is where both parties agree at outset to reach an amicable out of court settlement. This has advantages over the traditional route which can often be both acrimonious and expensive. Importantly, it also gives you control over how your assets are split rather than relying on the decision of a busy judge without the time to consider the intricacies of your specific requirements.

Working with your legal representatives you have the freedom to tailor a financial settlement that considers the needs of the whole family.

You and your spouse sit at a round table to discuss solutions freely and openly. A Financial Planner with accredited Divorce Specialist status can also be involved in these meetings as a financial neutral. Working for both parties, the neutral can explain all financial issues, policies and implications to be sure that the settlement meets both of your requirements now and for the future. As the name suggests, the neutral would then remain neutral by withdrawing from the process when a settlement is agreed, referring you to another accredited Divorce Specialist Financial Planner to implement the recommendations.

Collaborative Law is not for everyone but if you want control and a bespoke solution then it could right be for you. For more details on collaborative Law and for details of solicitors who are practiced in Collaborative Law, visit www.collaborativefamilylawyers.co.uk.

Financial Planning and your Divorce

  General Financial Planning Principals:

• Assess your needs and aspirations, assets and liabilities, income and expenditure.
• Help you understand the trade off between risk and return and to formulate an attitude to investment risk.
• Construct portfolios applying modern portfolio theory appropriate to your risk profile and to your long term objectives.
• Manage investments tax efficiently ensuring appropriate use of available tax wrappers (such as ISAs and Pensions).
• Apply knowledge of how products are priced and charged to evaluate the true worth of existing and new plans.
• Forecast cash flows based on income and expenditure and projected growth in assets and liabilities.
• Protect the financial plan against catastrophes.
• Review and monitor the plan going forward as circumstances change.

Specific Planning Requirements during the Divorce Process:

• Advise on tax consequences such as Capital Gains Tax on any assets sold or transferred as part of the settlement, the impact on pensions if retirement benefits are taken as part of the settlement and on the loss of ISA / PEP wrappers if used as an offsetting solution.
• Apply knowledge of financial products to fairly assess values of assets competently, efficiently and in a timely manner.
• Explain and evaluate investments that may have options, penalties and guarantees. This can include assessing guaranteed annuity rates, with-profit market value reductions, whether endowment surrender values can be enhanced by selling on the traded endowment market, and the effect of a deficit of a final salary scheme.
• Help you gather together all financial data and prepare a financial audit, applying our expert knowledge to check the accuracy of all financial information gathered.
• Help with the completion of legal paperwork including Form P and especially Form P1 (as P1 includes details of the options you want to take with regards to sharing existing pension schemes).
• Advise on your options with pensions; helping you to assess the benefits to you of offsetting, on-going maintenance, earmarking or sharing.

• Comment on portfolio efficiency if considering offsetting (this is especially important where the matrimonial home is the principal asset).
• Help to calculate the lump sum equivalent of future income through the provision of quotes for Purchase Life Annuities to help your solicitor to compare with the traditional “Duxberry” method of calculating this.
• Help with the process of amending the beneficiaries of death benefits of any retained life policies and helping with assignment of retained endowments or investment bonds.
• Help protect the death benefits in an occupational pension scheme in the event of death before a pension sharing order is implemented.

Specific Planning Requirements after the Divorce:

• Advise on implementing any pension credits awarded to you in a manner that is appropriate for your risk profile, using competent administrative support to ensure deadlines are met.
• Help explain the implications where there is a discrepancy between cash equivalent transfer value of a final salary scheme and the pension income that can be expected from it.
• Help with tax and retirement planning post divorce.
• Arrange for protection against the risk of the settlement payments stopping in the event of death of your ex-spouse.
• We can help you address any future need for loans.
• Project your cash-flow post divorce and comment on the impact of catastrophes on future cash-flow.
• Help you draw up a new Will.