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Guide to Separation & Divorce

Believe in...more Independent, Individually Tailored Financial advice

Believe in New beginnings: Whilst none of us enters a relationship thinking it is going to end, from a fairly tender age most of us do become aware that such things sometimes take a turn for the unexpected. At Independent Women, we believe that happiness and financial wellbeing often go hand in hand, and especially at this crucial time it is important to have some help to show you the way. This guide intends to set out some of the basic things you need to think about financially, and about which you may be well advised to seek expert advice. Recent statistics show that up to 45% of marriages in the UK end in divorce* and interestingly, there is a significant rise in the number of ‘silver divorces’, which refers to couples on their 50s and 60s getting divorced. Increasingly, women are becoming more financially independent and are not so often forced to stay in dysfunctional or unhealthy relationships purely due to economic necessity. There are no recorded statistics for cohabiting couples who separate, but the impact and implications (practically, financially and emotionally) can often be equally challenging. The emotional aspects of separation can be overwhelming, but you need quickly to take some control over the financial aspects of a situation and you need to have trusted advisers around you.

Believe in Clarity: The first step is to make an assessment of your financial considerations, and to determine which are urgent, which are less pressing but worth considering, and which may affect your long term financial picture. A good adviser is essential to help you achieve the best position for all stages, and to give you peace of mind so that you can concentrate on other things at this time.

Immediate You may need to arrange a short term unsecured loan to help tide you over and to stop you worrying constantly about the availability of funds to cover mortgage payments and arrangements, bills, children and maintenance, and legal fees. However, it is crucial that you get some advice on how to balance this and do not begin to get into debt which is difficult to control. You should also sit down with a trusted IFA and start looking at how best to adjust to your new position and start planning for the future independently. Even ‘baby steps’ at this point can help to make you feel as though you have some element of control over the situation. Check whether you are entitled to Legal Aid if you have little or no income. Medium Term Moving House: You may have to sell your current house and start afresh; or you may choose to buy your partner out of the former matrimonial home. This will be a major financial undertaking and you’ll need a good mortgage, insurance cover and a revaluation of disposable income. Insurance: If you have young children or other dependants, life assurance is a priority.

You may also want to consider permanent health insurance (this provides you with an income if you fall ill and have to stop work), private health insurance (which covers the cost of private hospitalisation), critical illness insurance (which pays a cash sum if you get a major illness such as cancer or heart disease) and redundancy insurance. Longer Term Pension Provision: Women often find it a challenge to build up an adequate pension because career breaks can take several years out of their working life and thus their pension contributions. Effective pension planning is thus essential. 1) If you work, think about making contributions to a pension; the longer you leave it, the more expensive it gets. If your employer has a company pension scheme, it will usually be best to join this. If not, you will need to start a personal or stakeholder pension plan. 2) If you are ‘under-pensioned’ even though you belong to a company pension scheme, think about making additional voluntary contributions (AVCs) to boost your retirement income. 3) You can get an estimate of the your state pension entitlement by completing a BR19 form – this cab be obtained from the DWP website (www.dwp.gov.uk).

Believe in Options Due to legal differences between married partners and co-habiting partners, there are some distinct considerations for both, and it is important to know your rights and entitlements.

Co-habitation An unmarried couple can separate informally without the intervention of a court. The court does have power, however, to make orders relating to the care of any children. At the end of a relationship, both parents are responsible for supporting their children financially regardless of where the children will live. Both parents are deemed equally responsible, even if they are not named on the child’s birth certificate. Neither you nor your partner has a duty to maintain the other at the end of a relationship if you were not married or in a civil partnership. However, financial arrangements can be arranged: • by agreement • through the Child Support Agency • through the courts. Married partners

Agreeing on financial support If you both agree to financial support, this is called a voluntary agreement. It can be written down or it could be a verbal agreement. You can agree, for example, that one of you will make weekly payments to the other for the support of children, or will meet rent or mortgage payments, household bills, or pay for the children's clothing and holidays. If you need advice on the options available for arranging child maintenance and for advice on how to set up a voluntary child maintenance agreement, you can contact the Child Maintenance Options Service. Their helpline number is: 0800 988 0988. You can also go to the Service's website at: www.cmoptions.org. Before you agree on a package of financial support, it may be useful to get legal advice about whether it is an appropriate arrangement. It may also be useful to have an agreement drawn up by a solicitor in case of future dispute. You might get help with the costs of making a voluntary agreement.

Believe in More: Now that the immediate considerations have been explained, there are other financial items of which you may wish to take stock. We would like to help you with some obvious priorities

Tax Divorce affects your tax position: a. If you have at least one child living with you who is under 16 or in full time education (including certain training schemes), you can claim the Additional Personal Allowance, though you may have to split it with your ex-husband/partner. Unless you can agree the basis of the split between you, it will be divided in proportion to the time the children spend with each parent. B. If you are employed, you should tell your tax office as soon as possible that you are claiming the allowance so that your tax code can be changed. This will prevent you from paying too much tax through the PAYE system. C. Though it may seem odd, whilst your maintenance payments are normally free of tax, you do still need to disclose them on your tax return. Benefits Ensure that you claim any state benefits you maybe entitled to. These could include: a. Child benefit – this is not means tested and is paid for children under the age of 16 or 18 if still at school/college. b. Child tax credit - this is paid through PAYE if you are in employment and have a household income of less than £58k pa.

Maintenance During the separation process you are likely to be getting some form of interim maintenance, particularly if children are involved. Make provision for the fact that this may not be the same amount on final settlement and work with your IFA to manage your new financial position. If your ex-spouse/partner is paying you maintenance, the payments would stop if he/she were to die. You can ensure that you will receive a lump sum which can be invested to replace the lost income, either by taking out a life assurance policy on him/her (in trust for you) or by ensuring there is a suitable provision in his/her will. Wills Divorce negates any existing will you may have written. However, you may want to revise your will during the separation process to ensure you re-direct your assets away from your Ex. Remember to make provision for the fact that your Ex is also likely to have amended his/her will, otherwise you will have to make a claim on his/her estate, which may not be successful, depending on his/her new commitments. You need to be able to trust the advice that you are getting and to have somewhere to turn for support when you feel the challenge of making the best decisions. Lawyers are an essential element of your practical approach to the process, but your

Clare Logie, Strategic Director

Believe in Understanding: Remember that, whilst this can be a time of intense emotional pain, great anger, a sense of betrayal, loss, sadness, disappointment, frustration, or perhaps of relief, freedom and hope – whatever those feelings, it is critical that you try to take a balanced view of the whole situation when making decisions that may have long term or far reaching impact on yourself and your family.

You need to be able to trust the advice that you are getting and to have somewhere to turn for support when you feel the challenge of making the best decisions. Lawyers are an essential element of your practical approach to the process, but your lawyer is neither your therapist nor your financial adviser, so do make sure you are taking appropriate advice from the most appropriate place. Independent Women can offer financial advice and support throughout the whole process of separation and divorce and can assist you in feeling you are, to some extent at least, in control of your financial position.

Believe in Yourself:

Lesley Collins Chief Executive

Believe in Independence: At Independent Women, we have developed longstanding relationships with our clients and continue to deliver not only expert advice, but peace of mind that finances are under control at all times, reducing stress and ensuring that our clients are always in the best position to make choices or changes in their lives.

All of our work is carried out at your convenience, and ensuring that you have more space in your day, and in your head, to focus on the other important things in life. We provide all of our clients with a free initial meeting - we think this is the best way to get to know your needs, and of course, for you to dip your toe in the water and find out more about us, too. About Us Scotland’s first Independent Financial Advisers to offer a tailored, personal service to a female clientele, Independent Women was launched over a decade ago as a division of Edinburgh Investment Consultants Ltd, and continues to thrive with a growing client base. The varied lifestyles of women today increasingly call for a specialised approach to financial services, with male and female financial needs differing widely. As women, we understand that this doesn’t mean a requirement for “pink and fluffy” - it means a premium on values, and working with companies who can deliver time savings, have friendly, responsive staff, and importantly, are a company that they can trust. Providing valuable advice that will make all the difference to their lives.

As women, while we know that we can be perceived as ‘tough customers’, we also understand that our lives are subject to constant change - whether through our careers, our relationships, or simply everyday occurrences. We also know that while it’s never possible to know what life has in store for you, ensuring that you stay in control of your finances will help you to stay in control of your life, whatever life may throw at you. Independent Women is not tied to any broker, provider or organisation, providing completely objective advice to our clients from across the entire financial market. Our expertise ensures that financial opportunities and returns are fully optimised through long term planning - making your money work for you, and providing you with peace of mind that your finances are in good hands at all times. Contact us today at our Head Office on 0800 433 4585 to arrange your consultation and take your first steps to financial indepence.

Head Office Ronaldson’s Wharf 2 Sandport Place Edinburgh EH6 6EU Tel: 0800 433 4585 [email protected]

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