FINANCIAL PLANNING AND DIVORCE - COLLABORATIVE FAMILY LAW
If you are considering divorce, you will no doubt have many issues to worry about, such as your future security, the effect on your family and children, and everything else that comes with such a stressful time. The old way of family law is changing, and many family solicitors now offer a different, less confrontational approach. This is known as collaborative family law. The idea is to try and take the conflict out of your divorce by meeting in a neutral and face to face environment aiming to resolve your issues. Both sides will appoint a solicitor, but the main point is to encourage a resolution of your issues without going to court. Of course, this can also mean that the divorce process is less costly than if you fight each other. You can also consider mediation in this process, where you use a trained person to help you reach an agreement.
Where does financial planning come into your divorce?
Obviously, a relationship breakdown will have a serious effect on your finances. You will probably be concerned about a number of financial issues, all of which can be assessed through financial planning. Financial planning can help with your divorce by working out where your finances stand before your divorce, and what effect the resolution will have on your future. We feel that this can form an important part of a collaborative family law approach, since if both sides know where they stand with their finances, they may have a better chance of coming to an agreement without unnecessary conflict.
Financial planning issues in a divorce
Here are some typical situations that comprehensive financial planing can help with in a divorce:
- Your future lifestyle
Financial planning is primarily concerned with assessing your current and future lifestyle. A comprehensive analysis will show you the effect of gaining or losing assets and income, and what changes to your current or future financial situation may take place.
- The family home
There are many possible resolutions to the issue of what will happen to the family home on divorce. You may decide that one party will stay in the home, or it may be sold and the proceeds divided. The existence of a mortgage will further complicate the situation. If you want to retain the family home you may need to find out if you can afford a new mortgage on the home in your sole name; alternatively, even if you do not keep the marital home you will still need to know if you can afford somewhere else to live. In some cases the person who moves out can retain a financial interest in the home until it is sold at a later date. Financial planning can help you to work out what this means for your future.
- Child maintenance
It is common for maintenance to be paid after a divorce. Financial planning can help you to establish just how much is needed, and what this income or expense will mean for your lifestyle. You don’t need to go to court to decide how much is paid, so good financial planning can help both sides to come to a reasonable agreement about how much is appropriate in a collaborative family law setting.
This is another area which will need financial planning on divorce. The pensions of either side can be a significant asset, and it is common for these to be shared on a divorce, with one side getting a slice of the pensions of the other side. Financial planning is needed for both parties: the person losing the pension assets needs to understand what they need to do to recover their lost retirement income; the receiving party needs to understand how the pension assets may be useful in planning their future. They will also need to manage these assets with investment management.
Hopefully, this has demonstrated that collaborative family law and financial planning go hand in hand. We can help you to plan your financial future after your break up, and help you to get your financial security back on track.
If you are a solicitor, why not download our guide to financial planning for family solicitors.
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