Tony (49) and Karen (46) were married for 16 years and after being separated for 2 years decided to finalise a divorce. They have two children Bethany (16) and Luke (14) both in secondary education.
Tony was a successful professional in the Engineering business and had an income of approximately £120,000 pa and number of company sponsored pension schemes. This had accumulated over more than 25 years and had therefore built a substantial pension fund over that time, some in Defined Benefit (Final Salary) Pension Schemes and some in Money Purchase arrangements.
Karen was an accountant before having children and had worked part time at a local practice earning £18,000 pa
Karen’s divorce lawyer contacted us to help Karen map out what she would need to maintain a reasonable lifestyle whilst ensuring the children were adequately cared for.
This included looking at her current assets, assets that she would receive as part of the proposed divorce settlement (from Tony’s solicitor), her current income and forecast pension income once received. We mapped all of this against her current lifestyle, outgoings and anticipated retirement date, factoring in milestones such as seeing her children through university.
Using a state of the art Cash Flow modelling tool, we were able to map out her financial plans, to demonstrate what the financial future could look like and how much would be required now to provide for her immediate and future needs. This showed that the initial offer for a settlement from Tony’s solicitor left Karen with a shortfall. We used our calculations to assist with a mutually agreed financial settlement ensuring security for her and her children.
Pension offsetting was used to establish a clean break, which enabled Karen to own the property outright, capital to invest in a tax efficient way for future needs and an additional monthly payment until the children finish tertiary education.
We worked with Karen to develop an investment strategy for her capital, in accordance with her attitude to investment risk, capacity for loss, flexibility and accessibility with which Karen was comfortable whilst making use of her tax reliefs and allowances. We also ensured that adequate provisions were made for the financial consequences of her death or disablement.
The case studies are based on real scenarios with specific client details removed to protect their identities.