Making the decision to end a marriage is a life-changing one and can have serious consequences. However, in the maelstrom of emotion, it can be easy to overlook some of the financial implications of divorce.
If the finances of a divorce are not handled effectively, it can lead to further problems which are the last thing anyone needs when going through such a difficult time in their lives.
If you have clients who are considering divorce, or have been recently divorced, they may need financial advice more than ever.
The financial implications of divorce should not be underestimated. So, if you want to ensure the continued financial wellbeing of your clients through this difficult time, it is crucial that they are well-advised. A financial adviser can be vital for providing guidance in specific areas.
When your client is going through a divorce, one of the best ways you can help them is by ensuring they achieve a fair and equitable settlement. In a divorce, when emotions are high, a financial adviser can act as a neutral third party.
Another way you can help your clients is by planning for their legal fees and related costs when organising the financial settlement. This will help to ensure that your client is able to come to a fair settlement without having to worry about the financial cost of the proceedings.
One of the biggest financial consequences of a divorce is the impact it will have on your client’s retirement prospects. Typically, most couples tend to make one unified retirement plan, but a divorce can disrupt this.
Since your client’s pension assets may be split with their partner, they may find that their share of the assets is no longer enough to provide them with the lifestyle they would like in retirement.
If this is the case, your client will probably find that their retirement plans may need to be re-evaluated around this dramatic change. They may need our help to reorganise their finances to ensure their immediate and long-term comfort and security.
When a couple separates, housing arrangements can be a difficult issue. One of the biggest concerns is often the question of who should remain in the family home and take on any associated mortgage.
If your client decides that they want to take on the house, one of the ways we can help them in this situation is to help them work out whether they can afford this.
Their lender will want to know that they can afford to keep up with mortgage payments, and they may have to prove they have sufficient income to take on the loan. We can give your client peace of mind by assisting with their mortgage-related needs.
Many separating couples will have joint financial arrangements, such as life insurance or Critical Illness cover. However, unless your clients have a ‘separation benefit’, they won’t be able to divide their joint insurance policy.
If this is the case, your client will have the choice between either them or their partner taking over the joint policy as a single policy or cancelling the policy and organising another.
If your client chooses to take over the policy, there are a few things they will need to consider. Regardless of whose life is being insured, the person who takes on the policy will be responsible for paying the insurance premiums and will have control over who benefits from the payout.
One of the things we can do to make the process smoother for your clients is by helping them to change the beneficiaries of the policy.
Since it’s important that beneficiaries are named on the policy itself, make sure that they don’t just rely on a legal document, such as a will, to change the beneficiary of their life insurance policy.
Divorce is a time of great upheaval and is a time when clients need financial advice more than ever to enable them to move on with their lives.
If you have clients who could benefit from financial advice in this respect, please get in touch. Email enquiries@prosserknowles.co.uk or call 01562 829 222.
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