Divorce rates rise by 18.4% as advice is issued on how to protect pensions, wills & assets | Personal Finance | Finance
Divorce rates rose in 2019. According to the ONS, there were 107,599 divorces of opposite-sex couples in 2019, increasing by 18.4 percent from 90,871 in 2018. Additionally, there were 822 divorces among same-sex couples in 2019, nearly twice the number in 2018 and of these, nearly three quarters (72 percent) were between female couples.
Understand your day to day budget and create a financial plan that fits with your goals
Emma continued: “To keep a similar lifestyle post-settlement, it’s important to understand how much you require day by day.
“Monitoring your daily outgoings, major bills and any expected future expenditures (such as private school fees) will give a goal to aim for when negotiating the settlement.
“Your financial settlement can be received in two ways, a lump sum or ongoing maintenance payments.
“While you may have budgeted and had a rough estimate of your future spending, it’s hard to know how much you’ll need in fifteen years’ time.
“This is where a financial planner can help. A Financial Planner will cost you and your family’s future life and account for any variables that you might not have considered. This will be key in working out whether any monthly maintenance will be enough, both today and in the future.
“A Financial Planner will also look at the lump sum option. Using a budgeting forecast they will project spending alongside future interest rates and inflation, to calculate how much cash will be needed in the long-term.
“The key is engaging with a financial planner early in the process. If the Financial Planner is brought in after an initial financial settlement has been agreed, the opportunity to match the settlement with future lifestyle could be missed.”
Another element that may not be considered when going through a divorce is retirement, but this could be a grave mistake according to Emma’s analysis.
Think about the long-term
Pension assets are increasingly important in the modern working world and a person’s ability to retire comfortably can depend on how they have built their pots throughout their working life.
Given their importance, Emma urged people to not forget about them should a marriage end: “For many married couples, one partner may have a more substantial pension than the other. The assumption would be that this would be shared at the point of retirement. Therefore, a pension also needs to be considered as part of the financial settlement.
“If pensions are being considered as part of the divorce settlement, it’s essential to take expert financial advice from the start. This is because there are usually options to consider such as offsetting other assets against a pension (e.g. one party keeps the family house, the other the pension) or sharing the pension.
“A financial adviser can help you to decide what the best outcome would be for you to ensure you are protected financially for the long-term.
“Going through a divorce can be difficult, taking these steps to protect yourself financially should help you be in a better financial position post-settlement and long into the future.”
On top of these elements, Tom De Burgh Williams, a Chartered Financial Planner at Charles Stanley, advised those affected to also look into rearranging their Wills and update their financial products and policies.
As he explained: “If you are going through a divorce or separation, then you may need to change your will to accommodate your new circumstances. Make sure you update this as soon as possible to ensure that your wishes are granted.
“When going through a divorce it’s easy to focus on the big financial assets – investments, the family home and pensions – but what about other financial products you have such as insurances, bank accounts, monthly subscriptions?
“The list could go on. Once you have agreed on the spilt of the big financial areas, then it’s important to consider all other financial products that need to be spilt accordingly. Not doing so could impact your financial future.”