"For example, not having income protection when single and post-divorce may be riskier than when a partner's income was there."
All these factors need to be taken into consideration, along with all areas of the client's finances: mortgages and property, investments, savings, protection and debts are quantifiable issues that will need to be dealt with.
Ben Burgess adds greater issues of emotional vulnerability revolve around children: "If children are involved, we could also be looking at custody agreements, maintenance payments, childcare costs, and potential career changes.
"Many of these will need sorting quickly and will be hard to face. In many occasions, one partner will manage the finances but both sides are likely to feel under pressure.”
Planning ahead
It seems discordant at best and a huge breach of etiquette at worst to mention the D-word to clients who have become engaged or have just recently married.
However, according to Roy McLoughlin, associate director for Cavendish Ware, there is an element of financial planning that can be done at the outset of marriage to help prepare for divorce and thereby remove some of the more stressful situations that can arise.
The question is - how to set this in motion?
He explains: "It is difficult, because one of the most romantic periods in one's life is not normally the time to discuss splitting up.
"Interestingly many advisers sense that the practicality of some independent financial planning is far easier than it was say 20 years back; nevertheless a careful advisory hand needs to do the steering.
"For example most advisers would now advocate two single life insurance policies rather than a joint one as generally the latter are totally impractical on divorce.
"Obviously pensions can only be in single names only. And there are also some useful tips concerning the ownership of property that some may wish to consider."
Lifesearch's Ben Burgess comments: “The best thing advisers can do is to listen and help plan ahead."
In his experience, the most common concerns people have post-divorce when it comes to protection are:
- How to get their former spouse removed from their original cover;
- How to set up a trust so their ex-partner doesn’t become a beneficiary of a claim;
- How to set up a life of another policy to protect the maintenance payments their former partners are making.
According to solicitor Peter Burgess: "Prenuptial agreements (and post nuptial agreements) are the obvious step to take at the outset to help prepare for divorce, but family trusts and estate planning also have a valuable role to play in protecting a party’s financial interests.
"It also pays to remain financially engaged during the marriage and to be well informed even if you are not the financial breadwinner. Financial literacy during a marriage can pay dividends after a divorce."
In the thick of it
The old totem says hindsight is 20:20 (no pun on last year's events intended). But when it comes to marriage, many clients simply have not seen their mistakes until far too late.
