Article by Christina
Divorcees need to talk to a money advisor according to Aviva.
Everyone knows that divorce is an expensive business. This is confirmed by the latest Aviva survey and makes talking to a money advisor a good idea. Aviva found that:
- 15% of over 50’s would need to delay their retirement.
- 25% say that they expect to live on a lower income and wouldn’t be able to re-build their savings.
- In fact, the average is a £7,700 lower income after divorce.
- 30% said they had to down size.
- 20% said that they wouldn’t be able to leave anything to their children.
- Over 30% did not include their partners pension in their divorce settlement. A money advisor would not have recommended this!
- You can see why with only 8% taking advice before the divorce.
The financial facts and figures are also stark. According to the Pension Policy Institute:
- Women hold less than 40% in pension value than men.
- That means on average women have £53,000 less in their pensions.
- Only 11% of divorces included a pension sharing arrangement order.
- Divorced women’s average pensions were £13,893 which is just over the minimum living standard.
More evidence of the need to talk to a money advisor first, alongside a solicitor.
Later life divorce on the rise.
17% of divorces now take place after the age of 50. With an increasing number in their 60’s and 70’s. This can make matters even more complicated as couples have often built-up wealth over a lifetime together which can be difficult to break up.
It’s important that all wealth is declared. This is sometimes contentious area where one party has managed the family finances exclusively. But the courts are becoming more involved in disclosure orders and are imposing penalties where assets have been concealed.
Pensions will always need to be looked at in detail and estate planning arrangements need to be looked at, in particular where assets are being broken up between the parties.
It’s not just divorcees who need to talk to a money advisor. With £5 trillion set to be passed down a generation over the next 20 years, financial advice will play a key role in ensuring that the transfer of assets is done in the most tax efficient ways.
Trust planning
Trusts could play a significant role in this, depending on the size of the estate and the intention of the donor. But it is important to use a specialist in trusts to achieve the right outcome. It can be very easy for intentions to be misunderstood, so it’s crucial to set out the expectations of the donor and the trust as clearly as possible at the outset. Things can change quickly in terms of misunderstood expectations which has led to a steep rise in the number of trust litigation cases.
A good money advisor should be able to help.
The number of trusts has already risen sharply over the last 12 months in response to the increasing costs of inheritance tax (IHT). Including pensions coming into the scope of IHT in 2027. 120,000 new trusts were registered last year, taking the total to almost 850,000.
People are not prepared to let the government continue to take more and more tax from their estates and are taking action to mitigate their tax liabilities.
Don’t forget to check your tax.
When circumstances change this can also sometimes lead to HMRC applying incorrect tax codes. It’s estimated that HMRC over charges £3.5 billion each year. You won’t be surprised to know that they are not obliged to automatically update your tax code or check for errors. It’s up to you to contact them.
Be aware this can be a long and frustrating process.
Get more information.
If you need help from a money advisor then why not contact Christina today. She offers a free initial meeting to discuss your requirements and explain how our service works. You are under no obligation to use us after that if you don’t want to and we won’t pester you.
So why not call us today on 01282 614444 or e mail us enquiries@ccfps.co.uk or use our contact form online.
