Financial planning for divorce: protecting your money

Nobody gets married expecting to get divorced, and most people take this step with great reluctance, as it’s heartbreaking and extremely stressful. In fact, a 1967 study by T H Holmes and R H Rahe, still widely accepted today, showed that getting divorced is the second most significant stressful life event after the death of a spouse.¹

Yet, according to the Office of National Statistics, almost half (41%) of the couples who married in 1996 had divorced before their 25th anniversary in 2021.²

Managing your money is likely not at the forefront of your mind if you are facing marital breakdown. However, speaking to a financial planner for divorce can help you secure future financial stability and protect your wealth. The impact of the decisions you make at this highly emotional and difficult time can have long-lasting consequences; therefore, seeking legal and financial advice is recommended to help you understand your options and circumstances.

Are you preparing to get divorced?

Perhaps you have made the decision to call time on your marriage, or maybe your spouse has announced their wishes out of the blue. Hopefully, with the recent introduction of ‘no-fault’ divorce, you have reached the decision mutually and amicably. No-fault divorce means that couples no longer need to assign blame for marital breakdown, with one partner divorcing the other. Instead, they can apply for divorce together.

Whatever the situation, professional advice can help to make your divorce easier, faster and less painful. Depending on your circumstances, you could benefit from advice from a legal expert, a financial planner or a divorce coach – and often all three working together can achieve the best outcome.

• Your legal adviser (most likely a family law solicitor) will support you throughout the process; explaining and discussing your rights and options, helping you understand your partner's entitlements, liaising with their solicitor, preparing forms and documents and, if necessary, presenting your case in court.
• A financial planner will help you understand the implications of any proposed settlement, to make sure the outcome is right for you before you reach a legally binding agreement. Following divorce, your financial planner will continue to support you. They will recommend appropriate financial products, such as a pension to receive any pension awarded from your ex-spouse, and provide ongoing planning to preserve the proceeds of your divorce to achieve your long-term goals.
• Divorce coaches can work with couples divorcing amicably, to guide them through the process, or with an individual, where they can help you prepare for meetings with your legal adviser, to reduce legal fees. They can also provide emotional support and help you to focus on the future.

How financial planning helps during and after divorce

As a couple, your finances are likely to be interlinked, even if you have maintained separate bank accounts, savings and investments. On divorce, a fair financial settlement should be agreed, to reflect the needs of both parties, so assets should be separated and potentially reallocated. Your wealth might be in property, a family business, ISAs, trusts, pensions or other tax wrappers. A financial planner can look at the practical implications of splitting these assets and provide advice individually or jointly as to the best approach.

At Canaccord Genuity Wealth Management (CGWM), your own highly experienced Wealth Planner will build an in-depth understanding of your marital and wider assets, and talk to you about how you want to live after your divorce. They will discuss your individual requirements and those of any children or dependents in your care, and then:

• Work out how much your income will be after the divorce (earnings, state pension, etc), and whether that will be enough to maintain your desired lifestyle
• Help you to understand the features, benefits and value to you of the assets under discussion, including yours and your spouse’s pensions, which are complex to value and difficult to compare on face value
• Consider what may be available to you following divorce, such as a share of marital assets, maintenance awards, or your ability to raise a mortgage, and use cash flow modelling to explore different outcomes and show what will be best for you, both practically and financially
• Help you decide what compromises you might need to make – for example, would it be better to sell your matrimonial home and create capital to generate income?
• Work alongside your team of other professional advisers to achieve the results you want.

They will be with you throughout the journey and beyond, to explain complex matters and empower you to make practical decisions, enabling you to meet your personal goals and give you the best platform for your new beginning.

Maximising your finances after divorce

If appropriate, your CGWM Wealth Planner can introduce you to a specialist Investment Manager, to help you look after your capital and/or create an income after your divorce.

Your Wealth Planner and Investment Manager would work in partnership to develop a comprehensive strategy for you, making sure your financial arrangements are tailored to your objectives, ethical preferences, attitude to risk and personal tax position.

Ask us how we can support you through your divorce

As a key member of your professional team, we can help you make the right decisions to secure your financial future. If you would like to talk about your divorce with one of our CGWM Wealth Planners, get in touch.

You may also be interested in:

• Comprehensive Wealth Planning Service | Canaccord Genuity UK
• 10 Steps To Financial Fitness | Canaccord Genuity UK
• Why staying invested is better than moving to cash | Canaccord Genuity UK

¹ The Social Readjustment Rating Scale by T H Holmes and R H Rahe, 1967

²https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/divorce/bulletins/divorcesinenglandandwales/2021

Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.

The information provided is not to be treated as specific advice. It has no regard for the specific investment objectives, financial situation or needs of any specific person or entity.

The information contained herein is based on materials and sources deemed to be reliable; however, Canaccord Genuity Wealth Management makes no representation or warranty, either express or implied, to the accuracy, completeness or reliability of this information. Canaccord is not liable for the content and accuracy of the opinions and information provided by external contributors. All stated opinions and estimates in this article are subject to change without notice and Canaccord Genuity Wealth Management is under no obligation to update the information.