Dealing with the many degrees of separation

Separation is a stressful and emotionally damaging time in anyone’s life. Once a couple have decided that a marriage should come to an end, many couples often enter into a further period of conflict through Lawyers to try to reach an agreement of the division of family assets. This can cause uncertainly on issues such as: Who should retain the family home, how will this impact on retirement, and will each individual be able to balance the books and have an emergency fund? Separation and divorce can put pressure on family finances as one household becomes two.

Collaborative practice offers separating couples a non-confrontational way of agreeing the legal, financial and family arrangements. The Collaborative approach differs from the traditional litigation approach, by supporting couples through dialogue and discussion. The difference in the Collaborative process compared to the traditional approach, is the use of “round-the-table” meetings with the couple and their respective Collaborative Practitioners. Collaborative Practitioners consist of Family Lawyers, Financial Planners, Accountants and Family Consultants. Each Collaborative Practitioner is trained and committed to minimising conflict and emotional damage, while ensuring that you make good financial decisions. In the Collaborative process, a Financial Planner is the “Financial Neutral”.

What is a Financial Neutral?

The role of the Financial Neutral is to gather financial information to create a schedule of matrimonial assets. Financial Neutrals are highly skilled in exploring and reality testing objectives and presenting complex information in a straightforward way. At a “round-the-table” meeting, the Financial Neutral will generate options on the division of matrimonial assets such as family home, pensions, investment, savings etc, for open and honest discussion between both parties and their respective Family Lawyers. Advantages and disadvantages as well as the tax consequences of each option will be clearly explained. In particular, pensions are often the most valuable asset within a marriage. There are many different types of pension benefits and pension legislation is often complex. Final salary pension schemes are complex and require input from a suitably qualified Pension Transfer Specialist. Options to pension share or offset pensions for other non-pension assets will form part of the option generating exercise and this will have on your retirement income can be calculated. A lifetime financial model is a useful tool to simulate and reality test options before decisions are made.

Financial Planners are uniquely placed to help separating couples through a difficult and transitional stage in their lives. Their financial expertise, planning tools and power of neutrality will provide a clear path for sensible decision making, allowing couples to progress to the next stage with complete financial security.

The Financial Neutral will act in a neutral capacity throughout the process. At the end of the process, the Financial Neutral will not seek further remuneration opportunities and any implementation work, investment or pension sharing should be carried out by another Financial Planner, unless consent is provided by all parties. Financial Neutral fees will be payable based on hourly rates and should never be influenced by the value of matrimonial assets.

A common misunderstanding about the process of divorce is that you are your ex-partner must go to Court. The intent of Collaborative practice is to avoid the often-damaging effects on families that going to Court can result in. This is achieved by both parties signing a Participation Agreement which states that you are committed to acting with respect and avoid the threat of Court action. A willingness to co-operate to achieve common interests is likely to increase the probability of a successful outcome.

If you are in the process of separation, please consider all options available to your situation.

Accredited Firm of the Year 2018

The team at Acumen Financial Planning are delighted to be awarded Accredited Firm of the Year 2018 at the recent CISI Conference & Awards. Accredited Firm of the Year 2018.