Divorce proceedings can be incredibly challenging, and many people rank them among the most stressful life experiences.

Failing to account for financial matters can compound an already difficult process, and financial planning can be particularly valuable during a divorce.

You may have clients who already have a financial planner when they divorce but have not considered speaking with them. You might also have clients who don’t have a financial planner but could significantly benefit from working with one, especially during and after their divorce proceedings.

Read on to find out when to involve a financial planner during a divorce.

Clients should seek a financial planner as early as possible

As soon as clients have decided to separate, it’s a good idea to start considering the financial implications and seek advice.

Indeed, there may be situations when building a separation plan into a couple’s finances could be beneficial even before a divorce, such as if they co-own a business or other significant assets.

However, for those who have entered the divorce proceedings without prior plans, early engagement can help ensure that both parties have a clear understanding of their current financial position and how it is likely to change. This means they can make more informed decisions about the split and begin preparing for a life away from their partner.

Pension savings can be challenging to split, and financial planners can offer valuable assistance

Pension splitting is often one of the most challenging and contentious elements of a divorce, particularly if one partner has a large pension and the other doesn’t.

This can happen for a variety of reasons – for example, if one partner left work to look after the children and stopped paying into their pension as a result. This can then create a fundamental financial imbalance, and the partner with the smaller pension may struggle to build security later in life.

Indeed, a report in Money Marketing found that divorced women typically have £53,160 less in pension savings than divorced men. Despite this significant disparity, 71% of divorce settlements don’t consider pension assets.

So, if your clients are going through a divorce and haven’t yet sought advice from a financial planner, deciding how to split their pensions is a moment when their assistance could well be life-changing.

You can read more about how financial planners can help clients split their pension in our previous article on the topic.

Deciding what to do with the family home can have significant financial implications

Another key area where financial planners can help during a divorce is deciding how to split or retain the family home.

The shared home is often one of the most financially and emotionally significant assets, and the importance of how it is split is heightened when there are children involved. So, deciding what becomes of the home is a particularly complex part of the divorce process.

A financial planner can help clients understand how various scenarios would play out in the long term. This could include:

• Retaining joint ownership, perhaps until the children have left, with one party moving out
• Both parties selling the property
• One party buying the other’s share
• One party transferring partial ownership to the other.

Each of these options can have considerable financial implications, so it’s important that clients seek advice before deciding on how best to proceed.

Making decisions based on the emotional outcomes alone may not be a good idea, as there could be financial issues could arise later that impact the client’s standing.

You can read more about how clients can split their homes and what financial planners can do to help in our previous article on the topic.

Divorce often leaves clients lacking in financial confidence

When couples divorce, it’s common for clients to feel financially unconfident in their new situation.

This could be because they previously relied on their partner to organise the finances and don’t have much experience themselves. Or perhaps they have been left with relatively little or have lost a substantial portion of their wealth.

This can make them uncertain about their estate planning possibilities, what they can do to support their children, or how they will be able to fund their retirement.

The later divorcing clients seek financial advice, the more likely they are to be limited by their options, as many of the financial outcomes will already have been decided.

However, a financial planner can help clients at every stage of their journey. Even if they’ve already made it through the divorce without assistance, a financial planner can work with them from their current standing to help them build a new, separate life.

They can support clients in ensuring they feel confident about their financial security going forward and that their wealth is best positioned to help them achieve their long-term goals.

Get in touch

To find out more about how our sectors can work together for the benefit of our mutual clients, get in touch.

Email info@blueskyifas.co.uk or call us on 0118 987 6655.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.