Divorce marks the start of a new financial journey, where a financial planner can offer ongoing support.
Successfully navigating a divorce requires a trusted team of professionals. It may be beneficial to work with a financial planner before or during the divorce, as once your divorce is settled, they will have a clearer understanding of your finances and can guide you forward smoothly.
In this blog we provide helpful tips on how to continue on a robust financial journey post-divorce, and how we can help you.
PROTECTING YOUR LUMP SUM
A divorce can be a very confrontational and stressful thing to go through, and you may not know what to do after a settlement has been finalised. While you are taking some time to assess your next steps, consider placing any lump sum in a high interest savings account or National Savings and Investment (NS&I) accounts while you explore your options.
For considerable lump sums, a financial planner can assist you by looking at ways to provide you with tax efficient returns in comparison to holding directly in cash accounts. Surprises aren’t always positive, and it’s crucial to maintain a financial ‘buffer’ in your current account or an easily accessible savings account to cover unexpected expenses that may occur.
SECURING YOUR FINANCIAL FUTURE
A financial planner can work with you to review your assets with the help of cashflow modelling technology, enabling you to build a robust plan to achieve your lifetime and financial goals moving forward. This will consider long-term needs such as retirement income, costs associated with dependents like school fees, memberships, holidays and occasional large purchases like a new car or significant home repairs.
Additionally, consider factors such as inflation, investment returns, interest rates and taxes in the long run and how this will affect your financial future.
MANAGING YOUR ASSETS
After separation, it’s crucial to review your estate plans, insurance coverage and pension arrangements to reflect your new circumstances. A financial planner can provide a holistic review, ensuring your overall financial strategy aligns with your updated needs and wishes.
During a divorce, pension rights can be a significant and complex asset to navigate. There are three primary methods for handling pensions in a settlement: sharing, earmarking and offsetting. It’s important you understand which method has been agreed upon and how it will impact your future pension plans and contributions.
Alongside producing a cashflow forecast, your financial planner will also be responsible for ensuring your affairs are as tax efficient as possible, ensuring you are making use of allowances (such as ISAs and pensions).
DON’T FORGET THE EXTRAS
You may be able to claim a 25% discount on your Council Tax if you are the only adult living in the property. Check with your local council to see if you are eligible and, if so, see if it can be backdated.
With regards to State Pensions, it’s no longer possible to benefit from an ex-spouse’s higher national insurance record to claim a higher state pension but you can contact the Department for Work and Pensions (DWP) to see if you would benefit from making additional National Insurance Contributions yourself.
WHAT’S NEXT?
Getting the right advice can help you feel confident that you’re on the right track to a secure financial future post-divorce. The sooner you have your finances in order, the more you can concentrate on you, in this next phase of your life. Our team of experts are here to help so please, feel free to get in touch.
Important Note
The information contained within this document is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
This article is distributed for educational purposes only and should not be considered financial advice.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
The opinions stated in this document are those of the author and do not necessarily represent the view of Progeny and should not be relied upon to make a financial decision.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
If you are unsure about the suitability or otherwise of any product or service, we recommend that you seek professional advice.
