Posted July 19th, 2011
A recent ruling in a divorce case has raised the bar in relation to discretionary trusts in divorce. In Whaley v Whaley the court ruled that an offshore discretionary trust set up by Mr Whaley’s father should count towards the marital assets even though Mr Whaley was not a beneficiary.
The issue the court ruled on was that Mr Whaley although not a beneficiary would probably receive capital from the trust in lieu of the “lost” divorce settlement. Therefore, the court ruled the discretionary trust to be an asset of the marriage.
If your divorce involves trusts or trust planning it is important to get the right advice and guidance.
For a confidential chat why not call me on 0800 092 1229 or email phil@thedivorceifa.co.uk
Tags: Beneficiary, Discretionary Trust, Discretionary Trusts, Divorce, Settlement | Posted in Discretionary Trusts |
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Posted May 26th, 2011
Once a divorce is concluded there is often the temptation to tidy up your financial matters immediately as a fresh start. But could this inadvertently cause potential issues later which could be avoided?
For example, it is common for people to consolidate pensions into one scheme (perhaps a SIPP) without too much thought to the consequences. But if the existing scheme is subject to a pension sharing order then under the legislation it is not possible for another pension sharing order to be placed against it.
By transferring away to a new arrangement this “protection” is lost and should the client get divorced again there is a potential for this new scheme to have a pension sharing order placed against it. There is also the same issue when clients’ purchase annuities at retirement.
So would it be an idea to consolidate before settlement so that the protection of the pension sharing order remains.
If you are considering your options post divorce and would like some advice, please do not hesitate to contact me on 01204 663904 or email phil@thedivorceifa.co.uk
Tags: Consolidate, Divorce, Financial, Options Post Divorce, Pension Sharing, pension sharing order, Pensions, Settlement, SIPP | Posted in Pension Sharing |
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Posted October 1st, 2010
This week I was contacted by a very concerned lady whose ex husband had not paid the implementation charge following their divorce and she wanted to know what she could do. Often, at settlement it will be agreed that 100% of the costs are paid by the other party and this will be seen as a small victory.
The implementation period will not start until all of the paperwork and the pension sharing order charges are paid. So it is important to get the charges paid as soon as possible to avoid delays. When you are relying on someone else to make payment this can be problematic.
The truth is that there is often very little that can be done as the costs of going back to court to enforce the pension sharing order can often be prohibitive. Inevitably, the only option is to pay the costs themselves.
So perhaps, prevention is the key. It is possible in some circumstances for the charges to borne from the cash equivalent transfer value. Alternatively, it might be appropriate to look to share the pension schemes which do not bear any charges. Yes, they do exist.
Here are some examples of the level of pension sharing costs involved:
UBS – £2,250 plus VAT
Police Pension Scheme- £400 plus VAT
Standard Life – £250
AVIVA – £0
With such amounts being charged and likelihood to rise in the future (see blog here) it is important to consider what the pension sharing order costs will be before agreeing the percentage split. Or deciding to pay these charges.
If this is something you would like further information on this please contact us.
Tags: AVIVA, Cash Equivalent Transfer Value, Costs, Court, Divorce, Ex husband, Implementation charge, Implementation Period, Pension Sharing, pension sharing order, Pension Sharing Order Charges, Pension Sharing Order Implementation Charges, Percentage Split, Police Pension Scheme, Settlement, Standard Life, UBS | Posted in Pension Sharing |
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Posted August 27th, 2010
So the pension share has been agreed. You have your settlement in place and are now looking at your options on what to do next?
What can go wrong you ask? Well unfortunately, plenty of things.
In the last few months, I have dealt with a range of problems, including:
• The pension sharing order didn’t appear – whose responsible?
• The pension sharing order was drafted incorrectly.
• The receiving scheme insisting that financial advice is taken – why can’t they just implement?.
• Delays in implementation.
I intend to expand on these issues in subsequent posts but if this affects you or you require any further assistance, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Financial Advice, Implementation, pension share, Pension Sharing, pension sharing order, Pension Sharing Orders, Receiving scheme, Settlement, the divorce ifa | Posted in Pension Sharing |
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Posted July 12th, 2010
As a Resolution Accredited Independent Financial Adviser (IFA) I am often asked to provide a summary of how we can work with clients through the Collaborative Law process. Below is taken from a flyer which is provided to the lawyers at the Greater Manchester POD.
HOW THE IFA WILL WORK WITH YOU AND YOUR SOLICITOR:
IFAs will be accredited by Resolution to work in the collaborative area, having undertaken training on the technical and cultural aspects involved, and passed an examination on the subject.
The IFA acts as a ‘financial neutral’ – rather than representing one party, their role is to assist all parties in highlighting issues and providing information that enables the collaborative process to move quickly and smoothly.
In addition to their specialist technical knowledge, IFAs can outline options to parties and comment on risk factors (eg in terms of pension options) which solicitors are unable to do as they are not authorised to give financial advice.
IFA’s can attend a first meeting with the Solicitors present, so as to display to the parties how they may add value to the process. At your discretion, IFAs can subsequently meet you without your solicitor being present, so as to control total costs.
EXAMPLES OF WHERE THE IFA IS ABLE TO HELP:
• Tax efficiency and mitigation if assets or investments are being sold as part of the agreement (eg ISAs, Capital Gains Tax issues).
• Pension-sharing issues under occupational final salary schemes, for both the scheme member and the ex-spouse.
• Issues surrounding individual pensions, including retirement options.
• The cost of replacing items under an employee benefits package for the ex-spouse (eg life cover, critical illness cover, private medical insurance).
• Mortgage availability and costings in relation to the marital home.
• Assessment of endowment policies and the options going forward.
• General financial education
• Budgeting exercises and lifetime cashflow projections to determine whether the agreed settlement will be sufficient to support the financial requirements of each party over time.
If you require any further assistance, please contact us on 0800 092 1229 or email advice@thedivorceifa.co.uk
Tags: Budgeting exercises, Capital Gains Tax, Collaborative Law, critical illness cover, Employee benefits, endowment policies, Ex Spouse, Final Salary, financial education, Financial Neutral, Greater Manchester POD, IFA, ISAs, life cover, lifetime cashflow projection, marital home, Member, Mortgage, Occupational Final Salary, Pension, Pension Sharing, POD, private medical insurance, Resolution Accredited, Resolution Accredited IFA, Settlement, Solicitor, Tax efficiency | Posted in Financial Advice |
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Posted March 29th, 2010
Of all the things that need to be understood in the context of pensions and divorce I consider this one to be the biggest. There is a major difference between the Valuation Date and the Valuation Day and it is imperative you understand it.
In England, Wales and Northern Ireland, the date on which the transfer value request, Cash Equivalent Transfer Value (CETV) or Cash Equivalent of Benefit (CEB), is received by the trustees or scheme provider becomes the Valuation Date.
This becomes the value which all of the negotiations for your settlement will be based on. For example, if you are advised by your solicitors, having received an actuary’s report, that the pension needs to be split 60:40 this will be done on the basis of the value on the Valuation Date.
However, this is NOT the value which will be used when the final benefits are calculated. The actual value will be calculated at some point within the four month implementation period and this date becomes the Valuation Day. The implementation period starts on the Transfer Day, which is the day the pension sharing order takes effect, or, if later, on the day the pension scheme has the prescribed information needed to implement the pension sharing order.
The period of time between the Valuation Date and the Valuation Day can be considerable and a lot can change in a pension during this time, which can have knock on effect on the valuation and subsequently the benefits derived from it.
If you would like to understand more about how the Valuation Date and Valuation Day might affect you and your benefits, call or email me for a confidential chat.
phil@thedivorceifa.co.uk or 0800 092 1229
Tags: Cash Equivalent of Benefit, Cash Equivalent Transfer Value, CEB, CETV, Implementation Period, Negotiations, Pension, Scheme Provider, Settlement, Transfer Day, Trustees, Valuation, Valuation Date, Valuation Day | Posted in Transfer values |
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Posted November 23rd, 2009
It is often stated that Cash Equivalent Transfer Values (CETVS) are not an ideal method of calculating the true value of a defined benefit pension scheme on divorce. This is because they merely provide a snapshot of the value of a member’s pension benefit at a particular point in time.
What is most surprising is by how much these valuations can undervalue these benefits and therefore, how the unwary could find that they are losing out on potentially thousands of pounds.
I have highlighted below some examples taken from a survey done by the actuaries, Bradshaw Dixon Moore based on a sample of their own reports. The findings are startling and what is most surprising is the variations between the same schemes, particularly the Public Sector and Uniformed Services schemes.
|
Scheme
|
CETV
|
Actuarial
|
Difference
|
|
|
|
|
|
|
NHS
|
£120,000
|
£164,000
|
+28%
|
|
Local Government
|
£84,000
|
£138,000
|
+64%
|
|
Police
|
£283,000
|
£520,000
|
+84%
|
|
Army
|
£105,000
|
£394,000
|
+275%
|
|
Private Company
|
£380,000
|
£608,000
|
+60%
|
You can get the full details of their findings here. Pension-CETV-value-comparisons
I have been asked to comment recently on whether actuarial valuation reports are worthwhile and what value they add to financial negotiations. Many clients are naturally trying to reduce costs during divorce and see this as a potential cost saving.
My advice is that where defined benefits are involved, regardless of the scheme, an actuarial valuation is a necessity. By finding out the true value of the pension assets you will be in a much better position to negotiate a fairer settlement.
For information on any of the information provided here, please contact me at advice@thedivorceifa.co.uk
Tags: Actuarial Valuation Report, Army, Bradshaw Dixon Moore, Cash Equivalent Transfer Value, CETV, Defined Benefit, Divorce, Local Government, NHS, Pension, Pension on Divorce, Pension Scheme, Police, Public Sector, Settlement, Uniformed Services | Posted in Transfer values |
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