Associate Financial Adviser Stacey Seaborne-Hall and Divorce Solicitor Hannah Porter answer questions about divorce and finances in the first of a series of articles.
It’s common practice for couples who are going through the process of separating and dividing their assets to obtain advice from both their legal team and Financial Adviser to help ensure everyone’s money is protected. It could even avoid a costly court case if you have specialist advisers helping divide things fairly.
Having trusted advisers on your side
An experienced Solicitor will focus on helping you navigate the legalities and emotional rollercoaster of your divorce. Understanding the details of your situation and how to get the best outcome for you while you go through the process. A Financial Adviser can help think about how to make the most of your cash, rethink your long-term financial goals and ensure your money is still invested as tax-efficiently as possible for your future. Whilst going through this big period of change this can be really beneficial especially if you haven’t been in control of the finances during your marriage. Working together, they will give you a chance to face the future in a strong position.
We want to get a divorce but how will we sort out the finances?
In English law there is one ground for divorce which is irretrievable breakdown of the marriage, depending on your circumstances you can prove that on one of five facts. When speaking with your Solicitor about the circumstances of your separation, they will be able to advise you which factor is most appropriate for you to use to obtain a divorce.
There are two stages to your divorce, your decree nisi, which is the court saying that you are entitled to a divorce, and your decree absolute which is the certificate stating that you are divorced (this is the piece of paper you would need should you wish to get remarried after divorce). Concluding a divorce does not conclude your financial matters and it is really important to ensure that your financial matters have been concluded before you finalise your divorce and obtain your decree absolute.
Financial matters can be dealt with in a variety of ways and resolving your financial matters following the breakdown of your relationship does not automatically mean that you have to go to court. It may be that you can use mediation or negotiation through Solicitors to resolve financial matters.
Whether you reach an agreement regarding your financial matters or the court make a determination about your financial matter, the division of the assets has to be set out in a court order. When looking at a court order that has been agreed, or making its own determination on the facts of your case, the court will look first to the needs of the any children from your marriage, and then to the needs of both you and your spouse. If there are surplus assets after meeting needs, the court will look at what is fair. When the court determines what is fair and what each party needs are it will consider a variety of factors such as the length of the marriage, the ages of the parties, each parties’ income, assets, liabilities and pensions.
Will the divorce settlement provided sustain my needs?
Cashflow modelling is a really effective tool to provide a visual analysis of your financial wellbeing over your lifetime. It considers life events, now and those of the future, such as earnings, retirement, ongoing expenses and one-off expenses like holidays, a new car or gifts to children.
A solid start to any financial plan will be a long-term projection of finances. This will show future requirements and how your assets will be built or used to meet your needs, helping to identify any potential surplus or shortfall.
Specifically in divorce, we can use cashflow to support clients in understanding any proposed settlement and how this may impact them over their lifetime. This can highlight any potential shortfall/surplus which can be reviewed and adjusted.
The results of a cashflow can provoke useful questions, for example, can any gaps be bridged by reviewing expenditure, tax allowances, investment products or the risk profile? If there is a surplus does it provide the option to reduce exposure to investment risk or increase expenditure?
If the settlement proposed is not sufficient this analysis can also be used in the mediation process to understand what value of settlement would be required to sustain a lifestyle.
If the outcome of the analysis is positive, this can provide reassurance that the settlement provided is sensible and will provide adequate support for the future.
Resolving financial issues can often be one of the most upsetting parts of breaking up, especially if communications have broken down, one of you has more insight into the finances than the other, or you both have different ideas as to what the right outcome should be. Working closely with a specialist Solicitor and Financial Adviser will help you find the resolution that is right for your situation so you can face the future with confidence.
For further information about the issues raised in this article contact
Stacey Seaborne-Hall – Tel: 01392 260 652 Email: [email protected]
Hannah Porter – Tel: 01392 421777 Email: [email protected]