Divorce among people aged 60 and over in England and Wales has been steadily rising since the 1990s according to the Office of National Statistics. The latest figures (from 2013) show that divorce levels amongst both women and men in this age group hit a 40-year high.
Divorce at any age can be an emotional and stressful experience and for so-called ‘silver splitters’, it’s sadly even more unlikely that a divorce will be straightforward. The older you are when you divorce the more complex your financial situation is likely to be. This is due to the accumulation of individual and shared assets over a longer period of time, along with having had more working years to contribute to pension pots.
Here are 5 reasons why advice from an independent financial adviser (IFA) can particularly assist those going through divorce in later life.
Get to the bottom of pensions
Pensions are usually a large and important asset in the calculation of divorce settlements and the issues surrounding them have become increasingly complex over recent years. As such, it is important that both parties achieve a fair settlement from these valuable assets. Whilst you may think that valuing pension benefits would be a straightforward process, in fact this can often be far from the case. Although an expert in their own field, your solicitor will unlikely to be able to fully advise you in relation to your pension. As IFA’s specialising in the area of divorce, we often work alongside divorce solicitors to assist with their and their clients’ understanding of the pensions involved in a case.
Establish a new financial plan
Depending on your level of involvement with the family finances over the years, you may be either financially knowledgeable or have little or no understanding. In any event, coming out of a marriage can be a daunting experience, often requiring individuals to take on an entirely new mindset. An IFA can help you to establish a new financial plan including how to utilise any wealth to draw an income or invest for future use. A financial adviser will look at all of your needs and requirements, along with your attitude to investment risk and come up with a tailored plan specifically for you.
Make the most of any lump sum settlement
Investment advice for recipients of lump sum divorce settlements is essential to assist in providing long term growth and replacing any lost benefits. Depending on the age at which your divorce is finalised, you may be reliant on the lump sum to fund or part-fund your retirement or you may need to use the funds for a property purchase. In any event, advice will be crucial in order for you to be able to maximise the value of any funds received.
Given the substantial drops in the Bank of England Base Rate, with the rate now standing at an unprecedented level of 0.25% since August 2016 (having previously been at 0.50% since March 2009), cash is no longer generating attractive returns. Therefore it is unlikely to keep pace with inflation, meaning the real value of cash deposits will deteriorate over the medium to longer term.
Put protection in place
In addition to providing advice in relation to assets, investments and financial plans going forward, IFA’s can also arrange life insurance in connection with maintenance orders to either protect your maintenance income in the event of your ex-spouse’s death or provide for your ex-spouse and your children in the event of your death.
Peace of mind
Apart from in the most extreme of circumstances, once a divorce settlement is finalised and agreed by a judge it cannot be revisited. As such, it is vital that you are happy (or as happy as you can be expected to be) with the agreement that has been reached. Guidance during negotiations is particularly important to ensure you fully understand what to offer or what is offered to you before you confirm your agreement.
For further advice in relation to your financial situation following divorce or if you are currently in the midst of a divorce and would like the comfort of advice from an independent financial planner, please contact us.