Part of the stress (apart from the emotional aspect) is making sure you get what is "rightfully yours" and that it is appropriate for your needs. For some people in a relationship, this may be the first time that they have had to deal with finances and with all the jargon that the financial services industry seems to throw at you, it can be an incredibly confusing time.
Once you have met with your solicitor, they will advise you on your share of the marital assets. We have an excellent family law team here, who work with you to make sure that you get everything you are entitled to. However, even if you've got a split of assets which says (for example) that you get £100,000 and your ex gets £100,000, how do you know what assets you should take? For instance, is it better to get £100,000 of property or £100,000 of pension funds? Or if you are looking at different pension rights, is it better to lose a pension with guaranteed benefits based on your length of service, or a "money purchase" pension where the final value will depend on the investment performance?
The first step is to think "what do I need?".
There is little point in agreeing to receive a pension at age 65 if you are 35 and need liquid assets in order to keep a roof over your head. You also need to take into account the accessibility of any funds, and the taxation implications of doing so. Pensions are only accessible from age 55 and it is likely that you will pay tax to draw funds from them. Alternatively, a house can be sold, in all likelihood without any tax liability, and turned into usable cash. Therefore although the value of a house might equal the value of a pension, in reality one or other might be worth more to you, depending on your circumstances.
Once the decision is made on how to split the assets, then its time to look forward, both from a financial planning perspective and also ensuring that any dependants would be provided for if you were to die, suffer a severe illness or be unable to work for the medium to long term. There are various plans that can be set up to protect a parent in the event of death, critical illness or long term disability/illness which pay a tax free lump sum, or regular income, if the worst should happen.
Beyond that you then need to look at your overall financial position and compare this to your objectives, whether this be maintaining your standard of living, putting children through school, or indeed going on holiday each year. This is where "cash flow planning" can be exceptionally useful in looking at your assets/liabilities/income and outgoings and projecting them forward over the medium to long term.
We work with clients to show the assets they have and how they might be impacted over time by income and expenditure, as well as asset growth projections. This can be put into a cash flow tool we use, which produces a flow chart like this:
This chart shows how you might expect your house, savings, investments and pensions to grow or decrease over time, depending on what you are planning to do. To see your finances in this way can be an incredibly rewarding, and indeed, therapeutic process. For a lot of clients, it may be the first time they truly understand their finances. In simple terms, it shows clients what they have and what they need their money to do to ensure they are financially comfortable.
It also gives you something to plot your progress against over the years to ensure that you are on track.
In summary, anyone who is about to (or considering) getting divorced should discuss their position with a financial planner along with their solicitor to ensure that, not only do they get their fair share, but also that the assets are appropriate for their needs. I would also suggest being completely open in your short, medium and long term objectives to ensure that they are achievable, and if they are not, we can help you understand the steps that can be taken to make them achievable.