Dealing with the financial fallout from a divorce

The situation

Amy and her husband, Peter, have lived separately for over a year, and having both now met different partners, it was time to finalise their separation and instigate divorce proceedings.

It had already been agreed that their daughter, Megan, would live with Amy at their home in Leicester. But, other than that decision, no other agreement had been made with regard to their financial affairs.

Peter had already retained a solicitor to act on his behalf, however Amy had not yet taken that step.

How I helped

The first thing I did was to recommend Amy contact a trusteed solicitor I knew in Leicester.

I then reviewed the matrimonial assets, as well as those held individually, to aid the production of the financial settlement. Armed with this information, and further guidance (and at times a shoulder to cry on) Amy and her solicitor could come up with a financial agreement she was happy with.

The settlement meant Amy had to switch the mortgage on the former matrimonial home into her sole name. To help this process, I recommended a mortgage adviser in Leicester who helped Amy to do this.

We then needed to plan Amy’s financial future.

The first thing to do was ensure that if Amy became ill, or died, Megan would be financially secure. This was achieved by taking out some additional, and surprisingly cost-effective, life and critical illness cover.

Although Amy was in full-time work, the maintenance paid by Peter was vital and she would struggle financially if it ever stopped. I therefore recommended that Amy take out an inexpensive life assurance policy which would pay out a lump sum, to replace the maintenance, if Peter ever died.

With the aid of financial forecasting software, I then started to look forward and show Amy the difference her divorce would make to her retirement plans. We concluded that provided she continued to save for retirement as she was currently doing, her financial future looked secure.

What did my financial advice achieve?

In the short-term my recommendation to a Leicester-based solicitor was vital in providing Amy with the legal advice she needed, delivered in a sensitive way, which ultimately produced a divorce settlement that worked for her.

I was then able to put Amy’s financial future on a secure financial footing, looking at ‘what if’ scenarios which could significantly impact on her financial future, making sure she could continue to live in the home Megan was used to, as well as looking to the long term and ultimately retirement.

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