Engaging with an Independent Financial Adviser early in the collaborative process.

As IFA’s we are often asked at what point should divorcing couples engage with our services and our answer is early on as we can quickly assess likely financial issues that will need to be addressed.

When referred by a collaborative lawyer we are happy to have an initial look at the situation and provide an outline action plan (in most instances at no cost) within our 1st free consultation.

This means you will have peace of mind that an independent qualified 3rd party has looked at your situation and if there are no obvious planning or implementation issues, you will be told at the start.

Typically, we assist with advice and implementation surrounding pensions, which as well as often being the most valuable asset after the family home, are complex and generally loaded in one party’s’ favour.

Pensions fall into 2 broad categories, defined benefit (sometimes referred to as final salary schemes) and money purchase arrangements which include personal pensions as well as company sponsored schemes.

Defined benefit schemes provide a defined level of income in retirement, based on service and salary, with the investment risk being borne by the company, not the individual. These schemes are harder to value in cash terms and as such valuations are typically not provided daily.

Money purchase arrangements do not provide the same level of certainty as the investment risk lies with the individual, and the level of pension is based upon investment returns and annuity rates, both of which fluctuate daily.

Depending on the type of pensions involved, and the individual scheme rules, we would advise how best to split the value of these assets and where appropriate, and agreed by both spouses, we would set up suitable pension contracts to receive any pension sharing order agreed as part of the settlement.

Where pension sharing orders are activated, we often will then work alongside the clients going forward to ensure their financial future post-divorce is secure.

Appointing an IFA who is familiar with divorce work and can communicate effectively with both the clients and the lawyers will avoid mistakes and add value to the process.

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