The Benefits Of Seeking Financial Planning Advice Pre-Divorce


Divorce is a challenging process, emotionally and financially. As you navigate the complexities of ending a marriage, seeking guidance is crucial. A financial planner is an often overlooked but immensely beneficial ally in this journey. They can aid you and your divorce attorney through the process of getting the best possible outcome in your divorce settlement.

There are multiple benefits to seeking financial planning advice pre-divorce, including getting advice on the retention of the family home, changing beneficiaries on long-term insurance, what to ask for in your divorce settlement, and what to do with your share of any retirement funds.

Are you not entirely convinced this is a service you must invest in before your divorce? To help you with this decision, we will explore the role of a financial planner in the divorce process, how they can aid you in making well-informed decisions about what should be included in your divorce agreement, and why it’s wise to seek their advice before your divorce.


What Is A Financial Planner?

Financial planners or advisors help individuals manage their finances and plan for the future. They assess your current financial situation so that they can understand your goals and help you create a roadmap to achieve them. In the context of divorce, a financial planner can provide invaluable insights to ensure you make informed decisions, enabling you to impact your financial future positively.


Why Is It A Good Idea To Seek Financial Planning Advice Before Your Divorce?

The decision to divorce is not just emotional; it has significant financial implications. Seeking financial planning advice before initiating the divorce process can help you understand the potential economic outcomes and make informed decisions. This foresight can be crucial in securing the best possible settlement for both parties.


What Documents Will Your Financial Advisor Need?

Before embarking on the financial planning journey for your divorce, you must equip your financial advisor with comprehensive information to facilitate a thorough analysis. A financial needs analysis is crucial for understanding your post-divorce financial requirements. To empower your financial advisor, gather the following information and documentation:


Income Documentation:

  • Payslips, tax returns, and IRP5s for both spouses;
  • Proof of the spouse’s earnings is crucial for child maintenance and spousal support claims.

Financial Statements:

  • Copies of finance or lease applications revealing earnings, assets, and liabilities;
  • This information must include any company account statements for businesses with spouse shareholdings.

Banking and Credit Information:

  • Bank and credit card statements provide insights into financial inflow and expenditure patterns;
  • Disclosure of all accounts, even those under aliases or third-party names.

Insurance Details:

  • Details of long-term insurance policies.
  • Short-term insurance policies – disclosing movable and immovable assets.

Retirement Fund and Estate Documentation:

  • Details of any retirement funds to which either spouse belongs;
  • This information is crucial for parties married in community of property or out of community with accrual.

Asset and Liability Breakdown:

  • Breakdown of assets and liabilities, aiding in a clear financial picture;
  • Recent valuations of movable and immovable properties.

Legal and Marital Documentation:

  • A copy of your antenuptial contract;
  • This document is vital in understanding the framework for asset division upon divorce.

Trust Information:

  • The details of any trusts owned by either spouse.

Monthly Income and Expenses List:

  • A current financial snapshot will help to enhance the understanding of living conditions post-divorce.


Financial Planning Advice: Your Divorce Settlement

There are many vital aspects that you need to consider before signing your divorce agreement. Many of these aspects are financial and often get disregarded in the heat of the moment. For this reason, it’s imperative that you seek financial planning advice pre-divorce from an experienced financial advisor. Some crucial aspects that they will be able to advise you on include the following:

To Retain Or Sell Your Family Home

One of the most significant assets in a divorce is often the family home. A financial planner can aid you in weighing up the advantages and disadvantages of keeping or selling the property, considering factors like market conditions, mortgage obligations, and future financial stability.

In many cases, the decision to keep the family home stems from an emotional connection to the house, but often this might not be the best idea. If you decide to keep the property, you could have a significant portion of your share of the divorce tied up in fixed property, which might leave you financially unstable.


How To Update Your Long-Term Insurance

If you’ve previously secured life cover to financially safeguard your spouse in the unfortunate event of your demise, reassessing this aspect during divorce proceedings is crucial. In many cases, the need for such coverage may diminish, and cancelling the policy can yield significant premium savings.

Your financial advisor is pivotal in this process, offering expertise to recalibrate your long-term insurance needs. They can also assist in restructuring your benefits and adjusting beneficiary nominations as necessary, ensuring that your insurance aligns seamlessly with your revised circumstances post-divorce.


Retirement Fund Asset Division

Divorce proceedings involve the complex division of retirement fund benefits, known as ‘pension interest.’ Precise drafting of the pension interest order in the settlement agreement is crucial, as the pension fund may reject a poorly formulated order. A skilled financial advisor can accurately calculate the pension interest claim and collaborate with the divorce attorney to ensure a precise agreement.

Post-award, strategic decisions on the pension fund capital, such as withdrawals and tax implications, require careful consideration, with a knowledgeable advisor guiding the process. Terminating an insurance-based retirement annuity may incur fees, but your advisor can provide insights to navigate this aspect effectively.


Maintenance Options

Before accepting a maintenance proposal, work with your advisor to create a realistic post-divorce budget. Consider legal bills and potential costs of single parenthood, like after-care facilities and domestic help. Your financial advisor can help incorporate these expenses into your budget, ensuring it aligns with your needs.


Provisions For Life Insurance On Maintenance Payer

A skilled financial advisor can help ensure that if your ex-spouse is supposed to pay you maintenance, they also get life insurance to cover that in case something happens to them. People often forget about insurance for unexpected situations like disability or death. Your financial advisor will ensure the insurance is set up correctly to protect you and your children.


Overall Benefits Of Seeking Financial Planning Advice Pre-Divorce

Engaging a financial planner before divorce offers numerous benefits. It clarifies your financial situation, facilitates informed decision-making, and helps you plan for a more secure financial future. By considering the long-term implications of your choices, you increase the likelihood of achieving a fair and favourable divorce settlement.

The importance of seeking financial planning advice before divorce cannot be overstated. If you need any advice on the divorce process, our Burnett Attorneys & Notaries possess a wealth of expertise from extensive experience handling a diverse range of divorce cases. We would gladly assist you in this endeavour. Please do not hesitate to contact us.