Let’s suppose, for a moment, that money didn’t exist. I know that sounds crazy but bear with me. Let’s assume everybody’s needs were met from the harnessing of the planets natural resources and bla bla bla. Or that we all had our own little patch of land with sheep to tend to. OK. So that aside, what would the implications be upon divorce? Well straight away it would negate any spiteful planning of divorce purely for financial gain. Divorcing purely to gain financially is just wrong. Well, I suppose if both parties agree, and are set to gain financially that may be different.

I don’t know. The ethics of all this are just mind boggling. It’s the extremes people, men and women alike go to, just to score points. In the upper echelons of the planets big earners it seems nothing is off limits in an acrimonious divorce.

The recent final settlement between Susan Decker, a former Yahoo executive and Michael Dovey, an investment banker, see’s their estate all sliced up and portioned out. Yup ok. That has to happen. But then where do the accusations of infidelity, drug abuse, electronic bugging and fiduciary misconduct fit in to all this? What did it achieve and what was the goal in mind? It served no other purpose than point scoring and character assassination. Along with the trauma children face when caught in the middle of a divorce, I do feel that all the animosity adds unnecessarily to the casualty list. Your ex partner may have been all the names under the sun you can think of, and more besides. Where ultimately will it get you to blacken his or her name?

You know the truth. A swine he may or may not be but ultimately, picking away at those wounds by dwelling on the reasons you aren’t together anymore will serve no short term gain nor long term purpose. Instead it is better to relieve yourself of that burden of bitterness and focus on what is right for you. Fix your gaze on what you can achieve by firmly seeking what you are entitled to and what you need to do to get through this and build for your future.

Scorching the earth is a military term. It refers to the destruction of parts of a countries infrastructure by decimating the ground to such an extent that crops can no longer take root and grow. Do you really want to do this to the pastures of your life? All guns blazing type divorces can lead to emotional and financial ruin as the anger and bitterness takes hold, and the solicitors fees rack up.

Surely it would be better to protect the land of your past so that it will be fertile to replant on in the future. Why not work with the Divorce IFA. I’m the Alan Titchmarsh of your post-divorce finances!

Image credit – Flickr/steve p2008

Or it may be that you want a divorce and of course, often it is a mutual decision. The question becomes how to do it?

The fact is, it doesn’t have to get nasty. It doesn’t have to be a mess. The courts don’t want that, your children (if you have any) don’t need that and frankly, neither do you. Wouldn’t it be nice to imagine that at the other end of the divorce road (a detour that many of us never expected) that something of a relationship can be salvaged?

Of course that would be great. There is rightly a growing trend of couples staying civil and even cultivating friendships with their ex partners post divorce, but that does not mean you should go quietly in to the night. Whether a divorce was yours or your (ex) partners idea, you still have the option of doing what is right for you and the rest of your life. Of course, remaining in contact and being civil for your children is a must.

But the days of the ex-wife being left with nothing and having to bitterly fight for every penny is long gone. After all, it was your marriage too. You spent time working, putting in to the house, raising children. You are entitled to a future as well.

If you spent years raising children at the expense of a career then you are quite right to expect that to be recognised. I’d go as far to say, in most cases, revered. Raising children, although immensely rewarding, can and often does go unappreciated. The skills required to rear young ones fit for the wider world, whilst maintaining a home at the same time are often understated and overlooked. Bottom line is, it’s not an easy job. In fact, it’s very difficult and very demanding.

You spent years doing just that, and are entitled to enjoy your reacquired independence now that the youngsters have flown the nest. A divorce need not put an end to the enjoyment, peace and security that life may have once offered you.

There are options to consider as far as pensions and assets are concerned. It was your marriage as well. You invested yourself and your life in to it. Therefore it is quite legitimate for you to expect to be compensated. Of course when you got married these are the sort of dilemmas you may not have imagined you’d face. When most couples marry nobody really likes to think of it in terms of a financial arrangement. It’s love, trust, respect. But if you are at a crossroads in your life when these things have fallen by the way side, and you’re asking yourself what you have to show for the last few decades, then it is a good time to find yourself a reputable Independent Financial Adviser (IFA) with a good knowledge of divorce and your entitlement to assist your legal counsel.

Why not call me in confidence for a chat?

Image credit – Flickr/e_calamar

Case law deals with this and best practice is around disaggregation of the pension assets so that these can be apportioned via the means of a pension sharing order. In big money cases this is relatively straightforward when looking to create equality as there are surplus assets and enough money to go round.

So when dealing with the asset schedules, in my opinion, the pension sits within them, rather than representing income. In fact, many courts use this balance sheet approach.

However, where the major matrimonial assets are the house and the pension only, disaggregation can often provide an unsatisfactory answer. For example, sharing the pension and sharing the house equally may not provide the solution that either party wishes to achieve, for example, the wife may not wish to relinquish the whole of the matrimonial home a she wishes to retain it for her and her children.

Often in such cases a mesher order, whereby the husband would receive an interest in the former matrimonial home but deferred until a future date, for example until the children’s 18th birthday or the death of a former partner were used, but we see less and less of these over time.

This leads to the situation where offsetting of the pension assets occurs and there is no set formula of how to properly measure how to offset. On many occasions, the court will make an ad hoc assessment on what they believe is broadly fair.

So the lesson here is, that there is no agreed method of offsetting, in fact at a recent seminar I attended, the actuary confirmed that in the last year he had seen eight different methods used to calculate offsetting. I will look at these in a future blog, however, it goes to show how much care needs to be taken when looking at this matter and agreement on which basis the calculation should be done on.

If this is an issue that affects you please call in confidence on 0800 0921229 or email me at phil@thedivorceifa.co.uk

However, it is probably one of the most useful, and before any court proceedings involving a pension and pension sharing, it is in my opinion absolutely vital that this document is used.

Too often when I am brought into assist with a client’s situation, usually at the last minute, there is a mad scramble for information.  In many cases the information that I require can be garnered from a form P which has been correctly completed.

Often the gathering of information and data is the hardest job with administrators and pension companies being tardy and unwilling to provide the relevant information.  Form P cuts through this and enables the specific information that a financial planner needs to advise the client correctly.

So if you have a query about a pension and need information use the form P to protect yourself and if you have any issues with the information provided, feel free to get in touch.

Please call in confidence on 0800 0921229 or email me at phil@thedivorceifa.co.uk

However, it is often the case that couples, or individuals, wish to attempt to exclude the courts powers and to protect and distribute their estates as they see fit.

Often such planning is undertaken in the context of the succession planning of assets or businesses, and not only is thought being given to what might happen on the breakdown of a marriage, but
also to the issues which may occur upon death.

It should be noted that any pre-nuptial agreement should be undertaken in relation to will planning, as  any will you have drawn up becomes invalid upon marriage, or re-marriage.

Therefore in any situation such as this it is important to consider not only what the courts may do in the situation of divorce, but also on death.   It is certainly true to say that courts are taking more note of post and pre-nuptial agreements, and I can only see that these will become more and more of a planning opportunity for families going forward.

If this is an issue that affects you please call in confidence on 0800 0921229 or email me at phil@thedivorceifa.co.uk

The first consideration should be to taxation and it should be noted that for the purposes of Capital Gains Tax it is the date of separation that is generally more relevant than anything happens within the divorce itself

The key here is that where a transfer is made in the same tax year as the separation there will be no taxable capital gains or losses for that matter, for the transferor. When considering the asset position of the business or partnership it is important to check ownership particularly in relation to shares or the individual asset in relation to a partnership.

Possible solutions may involve the purchase of shares or the sale of property to enable the financial settlement to be concluded.

Care needs to be taken where pensions hold assets of the business. Often we see shares and properties occupied by the business held and owned by the pension scheme.

Therefore further thought needs to be taken on how these assets are dealt with.

This is an extremely complicated area of financial settlements on divorce and it is essential that you get the right team around you to assist your negotiations. In my opinion, this would be a family lawyer, accountant and independent financial adviser.

If this is an issue that affects you please call in confidence on 0800 0921229 or email me at phil@thedivorceifa.co.uk

The course was extremely enjoyable from the point of view of updating my Continue Professional Development (all Resolution Accredited IFAs have this obligation to keep their accreditation) but on a personal note is was lovely to meet up with many of my fellow Resolution Accredited IFAs and put a face to an email or Linked In contact and to talk shop with them.

I was struck by the level of co-operation and collaboration that went on during the day and this bodes well for the future of financial advice and planning within divorce cases.

I was asked to provide guidance on a number of scenarios:

• The benefits are drawn now based on normal health.
• The benefits are drawn now based on serious ill health provisions.
• What happens on death.
• What benefits might be paid to children.
• What benefits would be payable if the pensions were subject to 100% pension sharing orders.

Where the planning opportunities arose was in the difference between benefits that been crystallised (i.e. in payment) and uncrystallised (i.e. those that were not).

For uncrystallised benefits it is possible for a tax free lump sum to be taken in lieu of the whole of the pension benefits.  But for crystallised benefits this is not
possible and either ill health retirement provisions apply for final salary benefits or impaired life annuities or drawdown for money purchase with the option
for lump sum benefits to be paid upon later death.

It was important to understand each client’s needs and what they were looking to achieve.  Then it was a case of balancing the desire for a tax free payment now versus protecting the value of the benefits that had been accrued to date.

If your divorce settlement / pension sharing case is affected by these issues why not get in touch for a free, confidential, no obligation chat on 0800 092 1229 or send an email advice@thedivorceifa.co.uk

We received further information from the actuaries we use (Bradshaw Dixon Moore) on the subject which is worth sharing here – http://www.ancillaryactuary.co.uk/home/2011/12/29/public-sector-pensions-green-shoots.html

What was interesting was that they had quite rightly in my opinion taken the decision not to continue with estimated values for pending reports. Although, this inconvenienced clients and solicitors it was an important stance to take.

I received this response from Peter Moore at BDM when further questioned.

“Publication of the transfer club factors vindicated our stance. We understand that the mortality rate changes for some schemes are material and vary by age and gender. We believe that this provides a reasonable guide as to how the CEVs will change, scheme by scheme; but want to see the actual scheme factors and some new basis valuations before we can be certain.

One of the big issues from our perspective is professional actuarial integrity. If an actuary writes a report and cannot be certain that key numbers and results are reasonable and correct, there is a professional obligation to clearly state the position. Our view is that although such a report can be produced and be compliant from an actuarial perspective, we do not feel that such a report would be acceptable to a court that would wish to place reliance on it as expert guidance – ie Expert Witness Reports. From our perspective, we want our reports to all be fully compliant and avoid reports with too many caveats.”

So if you are involved in a divorce where an old or estimated CEV is being used I would be very cautious. If you would like to discuss this issue in more depth, why not get in touch for a free, no obligation chat on 0800 092 1229 or email us advice@thedivorceifa.co.uk

The armed forces scheme has taken a welcome stance which is that pension credit members can draw benefits at age 55, rather than age 60 which continues to be the case under the Police Pension Scheme and the Fire Service Pension Scheme. Albeit there is a reduction for early payment!

It is hoped that at some point, all of the schemes will draw into line with each other, however the current guidance appears to be that this is unlikely.

If you are experiencing difficulties with your pension settlement in any of these pension schemes, why not get in touch for a chat on 0800 092 1229 or email phil@thedivorceifa.co.uk