Financial planning for divorce

First of all, this is an area where having a financial adviser work alongside your lawyer, early on can have huge benefits. Most people worry about the house, yet some of yours or your partners most valuable assets might be a pension scheme.

You may also need to consider how defined contribution pensions and defined benefit schemes, within your joint estate, might work together. The future tax implications of these schemes can have a real impact on the money you might receive after a divorce. The lifetime allowance, for example, is often an area that is completely overlooked in a divorce case, and its impact could significantly reduce the level of income or capital you might be suing for, without realising it.

When finding the right financial adviser to work with, look for someone that has experience in divorce and is a proponent of cash flow planning. Using a cash flow plan early on in your divorce process can help provide a great piece of evidence for the potential future growth of joint assets and give an idea of just how much income they may provide.

If complex pension schemes are of debate, it’s likely that an actuary will also need to be involved in the process. A well-heeled financial adviser that handles divorce cases regularly can help you and your solicitor pose the right questions to the actuary and decipher the complicated report that will come back. If you do end up having to split your pensions as part of the divorce, a pension sharing order will be issued by the court. It’s important to take advice around these to ensure your share is transferred into a suitable scheme and that the proceeds are invested correctly.