The worst of the pandemic is now in neutral or hopefully in reverse gear so life is regaining shape. The so called normality may never be seen again, still, life goes on. And with it, our personal relationships that may have been changed in unprecedented ways. For some this means growing closer, for others...further apart. The close and constant contact with ourselves is challenging enough, but we don’t live in a vacuum. Navigating new challenges with unforeseen circumstances, the aggravation of pre-existing tensions may lead to the painful or perhaps even joyful decision to part company.
Emotional and psychological challenges aside...it is imperative to concentrate on the practical side too.
The starting point is to pinpoint all the figures and then work out a solution that will meet everyone’s needs.
Pensions – know the right approach and your rights. With the correct expertise you should not need to give up your entitlement. Depending on complexity of your situation, you have several options:
1. Pension sharing orders – ‘a clean break’ where a pension is ‘split’ so that a percentage share of the spousal pension is awarded to the other party.
2. Pension offsetting – value of the pension is offset against other marital assets, e.g. you keep your pension and your ex gets the home, savings or investments.
3. Pension Attachment – comes into force on retirement, direct payment from one’s pension pot into the ex-spouse’s.
4. Individual agreements – these set out any specific or special arrangements you agreed.
It is worth remembering that the State Pension may also have to be shared. Your basic State Pension and the New State Pension are not shareable. However, it is possible to use the former spouse’s National Insurance contributions record to increase the other half’s State Pension provision, whilst ensuring that the affected spouse will not have their own Pension reduced.
Additional State Pension can also be shared on divorce, but if you plan to remarry (never say never?!) this arrangement ends.
2. Property – Marital home and other properties
Coronavirus has brought the housing market to an interesting junction – values, demand, supply and mortgage availability are far from certain, don’t rely upon your home as a bargaining strategy.
3. Investments & Savings - it’s not clear how long it will it take for financial markets to recover to pre-covid level – exercise caution when dividing this type of assets.
4. Business Assets – business valuations pre-pandemic will have to be revalued, accounts brought up to date. Particular business strategy may no longer be suited to post-covid world.
5. Employment or self-employment – maybe you or your spouse have been furloughed, facing a redundancy or if self-employed perhaps struggling to find work. The impact this might have on the overall picture cannot be overstated.
6. Wills and Lasting Powers of Attorney – have them professionally reviewed as they will need a complete rewrite following your divorce.
7. Have your financial settlement confirmed via a court order – your hard earned money should be protected against any future claims by your ex-spouse.
And finally, Good luck! It takes courage to effectively start your life over again, financially as well as emotionally, and it is imperative that in the case of the former, you seek expert financial advice. We are here to listen and help, whatever stage of your life you are at.
Silvia Johnson BSc(Hons) DipPFS EFA CertCII (MP) is a Director & Independent Financial Adviser at Royale Thames Wealth Ltd.
020 8720 7249 / 07908 109 741
Royale Thames Wealth Ltd is an Appointed Representative of New Leaf Distribution Ltd which is authorised and regulated by Financial Conduct Authority number 460421. The value of your investment may go up as well as down and the value is not guaranteed. Past performance is not a guarantee of future performance. Wills and Estate Planning are not regulated by the FCA.