Lowes Magazine Issue 130

PLANNING

How we help clients

Financial planning in divorce While recent figures show that divorces in England and Wales are down by nearly a third – a 29.5% decrease between 2022 and 2021 and the lowest number since 1971 – for those going through divorce and separation it can be an emotionally and financially traumatic time. While there are obvious financial assets to cover in divorce discussions, such as property, bank accounts, investments and savings, other aspects of a couple’s finances which are less day-to-day, can be overlooked. Pensions is one asset that the law requires to be considered, not least because they can have an enormous impact on the future financial resilience of individuals. The impact on retirement plans of a relationship ending can be particularly difficult. This can particularly affect those who have taken career breaks or earned lower average salaries than their partners, and so typically have built up lower pension pots. Pensions can be missed out of divorce discussions because they are personal and also, they appear complicated. This is leading to one party missing out on future income which probably should have been theirs. Although a pension is earned by one spouse, it is generally considered a joint asset. This means it is subject to division in divorce. Divorces among older adults, those aged 60 and above, has been rising in recent years. By this time in life, pension pots

Lowes adviser Debbie Ramm explains how Lowes can help with the financial planning when couples divorce.

Unmarried couples Another reason for the decline in divorce numbers is that not all couples are choosing to marry, opting to co-habit instead. If the couple separate, often the female can be most affected in terms of financial security. Advice is also advisable here, as there are limited legal rights when a cohabiting relationship ends. and talk through the most appropriate options to share pension assets. Once decisions are made there will be administration to be undertaken with pension providers and there could be tax implications, depending on whether the pension assets are accessed. can be of significant size, making it one of the biggest assets alongside property. When people do divorce in later life, they face the prospect of supporting two homes and any financial retirement planning made as a couple needs to be completely redone. Dividing the assets and pensions after a lengthy marriage at retirement age can be tricky where there may be no means of building up future assets or income. So pension sharing will need careful planning. This is where a professional adviser can help, working alongside solicitors on the legal side of proceedings, to help ascertain valuations

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