February 19, 2025 • 41 mins
In this episode of MyFamily Pod, host Nichola Bright, family lawyer at Myerson Solicitors, speaks with financial planning experts Jenni Macdonald and Liz Grimshaw from Revival Financial Planning.
Together, they explore the financial challenges that arise during divorce and separation and explain how expert financial planning can provide clarity and security during turbulent times.
Topics include:
- The role of cash flow modelling and expenditure forecasting in divorce settlements.
- Understanding mortgage capacity reports and their impact on asset division.
- Demystifying pension sharing to secure long-term financial wellbeing.
- Broader financial planning strategies for major life changes such as redundancy, retirement, or moving home.
Whether you are navigating a divorce, supporting a loved one, or seeking expert financial advice, this episode offers practical tips and insightful strategies to help you plan confidently for the future.
If you’re seeking support for a family law or financial planning matter, our expert team at Myerson Solicitors is here to help. We provide compassionate, tailored advice on divorce, financial arrangements, and co-parenting to ensure you receive the support you need.
Find out more here: https://www.myerson.co.uk/personal/family-law
For more resources and support, you can also reach out to Jenni and Liz at Revival Financial Planning
Find out more here: https://www.revivalfp.co.uk
Stay tuned for more episodes of MyFamily Pod, where we tackle the issues that matter most to families. Don’t forget to subscribe and follow us on social media for updates!
LinkedIn: Myerson Solicitors
Instagram: @Myerson.Solicitors
Website: www.myerson.co.uk/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
Hello everyone, welcome to My Family Pod.
I'll be speaking to JennyMacDonald-Sykes and Liz Grimshaw
of Revival Financial Planningabout the importance of
(00:21):
financial planning in divorce,cash play modelling, mortgages
and pensions.
UNKNOWN (00:27):
Music
SPEAKER_00 (00:30):
Hello, everyone.
I'm here today with Liz Brimshawand Jenny MacDonald-Sykes from
Revival Financial Planning.
If you'd like to introduceyourself, ladies.
Yeah.
So, hi, I'm Jenny.
Thanks for having us here today.
I am a chartered financialadvisor and I've been working as
a financial advisor for many,many years.
And about four years ago, Lizand I met, didn't we?
(00:55):
And we both sort of decided wehad a bit of a passion for
wanting to help people make themost of their money and
particularly help people withsort of divorce financial
planning.
Morning, I'm Liz.
Thanks.
Yeah, thanks for having us.
So I retrained as a financialadvisor about five years ago,
just about the time just beforeI met Jenny.
(01:16):
And as a career change for me,I'd worked in the city, but
wanted to retrain and dosomething different.
And yeah, Jenny and I met at aworkplace and we chatted about
the difference in you knowdifferent specialisms that we
could have within financialadvice and we both decided that
actually we could make quite abig difference when people are
going through divorce orbuilding a new financial plan
(01:36):
for the future.
Brilliant and that's how we knoweach other because obviously at
Myerson I'm a family lawyer andwe have a family team here
specialising in divorce andfamily separation and often need
your services to help with ourclients going through that and
the financial advice they needat the beginning and the middle
and the end of that process.
and how we can help each other,what we'll talk about now.
(01:59):
So divorce and the division offinancial assets often requires
assistance from financialplanners, financial advisors,
especially when it comes to cashflow modeling for a client.
So for example, they are in asituation where they are looking
to divide their assets andtrying to negotiate a settlement
with their spouse.
They may or may not be in courtproceedings by this point, but
(02:22):
they are looking at figures.
So, for example, they're lookingat selling the house and they
might have a cash sum and a lumpsum payment coming to them or
hopefully coming to them.
And they want to see how muchthey need to be able to move on
with their lives.
And that's where they need acash flow forecast for their
future they might be looking at.
They might be in their 40s or50s.
(02:42):
They might have young children.
They might be looking to retirein the next 10, 20 years.
And they really want to see howmuch money that they will need
from their divorce to be able tohave a comfortable standard of
living if possible.
And that applies to both husbandand wife, both sides.
So tell me about how you canhelp those people going through
separation who need cash flowforecasting.
(03:05):
And what does that involve fromyour point of view?
How much detail do you need togo into?
And what does a cash flow modellook like?
So every client's different.
Everybody's situation'sdifferent.
Sometimes we might be looking togive someone peace of mind.
Sometimes they might need a bitof a reality check.
But the way that we work is thatwe would talk to them about
their current income andoutgoings.
(03:26):
And it may be that following thedivorce, that would look a
little bit different becausethey might be needing to sell a
family home or whatever, again,depending on the situation.
So we'd look at income,outgoings, all of their assets,
and then we'd run a model andshow that, right, okay, this is
where you're at.
This is perhaps a proposedsettlement, or these are the
(03:48):
ideas that you can put forwardin terms of a settlement.
And it's often a three-wayconversation, isn't it?
Genuine looking, like, you know,with the client, with the
solicitor, this is what'sperhaps realistic in terms of a
percentage split.
Family home, assets, pensions.
and then model that and seewhere the gaps are.
Perhaps the client might need toadjust their expectations in
(04:10):
terms of spending, or it may bethat they need to push for a bit
more in terms of pension share.
We can advise that.
And we often run several models,don't we?
Yeah.
I'm going to ask about themodels and how many models you
might get us to run.
I think because often we getinvolved at the beginning of the
process.
So then we might be running theinitial models and, you know,
(04:30):
this is what we think or this iswhat they think settlement might
look like.
But then with all the back andforth and the negotiations, it's
sort of, OK, well, the otherside has offered this.
How does that look?
Yeah.
Will I be OK with that sort ofsettlement?
UNKNOWN (04:43):
Yeah.
SPEAKER_00 (04:44):
it's not quite right so we're going to go back and
offer this how does that lookand it's just giving that peace
of mind of not just what thejust what the figures are
because sometimes the figuresthemselves are quite
overwhelming but putting thatinto a model that's visual that
allows someone to see what thelong-term outlook looks like and
that actually in most cases theyare going to be okay they might
(05:06):
have to adjust expectations alittle bit but actually they're
going to be okay going forwardsort of making sense of those
blunt figures there sometimesand then sense do they um Are
they sort of long reports orthey used, I'm guessing they'll
be user friendly, not just forsolicitors, but for the actual
client themselves so they cansee in black and white how much
(05:26):
money they would have on ayearly basis, for example, if
they, you know, to supplementtheir income.
Yeah, I mean, the reports, thekind of model that we show run
from their age today up to 90,99.
And so it's kind of, you know, awhole lifespan.
And they're often veryconservative in terms of
spending and also asset andinvestment growth.
(05:48):
You don't know what's going tohappen in the market.
You have to be conservative inthese things.
Exactly.
And then we'll run severalmodels and then we put those
into a report.
But we run them.
Put them into a pot, but thenwe'll have either an in-person
meeting or a Zoom meeting andrun through it with the client
to make sure that theyunderstand.
And then that report is passedto the solicitor as well so they
(06:08):
can see our different options.
And sometimes they've had anoffering from the other side and
we'll model those as well.
And then they can see how thatlooks.
Okay, that's good.
And what sort of questionswould...
A typical client of yours asksthose things.
They ask things like, will I beable to afford a house?
Or will I run out of money?
Or will I be able to retire byage 55?
(06:30):
Do you get these sorts ofquestions?
Bullseye.
Yeah, definitely.
Will I run out of money isprobably your biggest question.
Will I have enough?
And I think, what doesretirement look like?
Because it's all very wellworrying about the situation
right now.
But actually, what does it looklike?
10, 15, 20 years down the roadand will I have to downsize at
(06:51):
some point to make things work?
Yeah, those are all commonquestions.
Yeah, and that must be quite acommon part of someone's plan.
Potentially if they've got youngchildren and they have a big
house at the moment, some peoplemust think I am going to
downsize when the children areat uni or after that point in
life.
although that's a harsh realityof it.
(07:13):
I think more and more I'm seeingthat people are factoring that
downsizing into their cash flowforecasts.
I think they have to.
I think the cost of living isexpensive.
Exactly.
And if people are on the youngerside when they're getting
divorced and they need thatshare of the family home to be a
bit larger and perhaps take alesser percentage of the
(07:33):
pension, then we factor indownsizing and we model that
quite often, don't we?
Yeah, yeah, yeah.
Because you've got to factorin...
the potential price increase oftheir current property.
It must be so difficult to dothat from your point of view, to
forecast that and then forecastthe house price rises in the
next 10, 20 years.
It's very difficult.
Yeah, I mean, obviously we haveto use assumptions in terms of
(07:56):
property growth.
And again, we're relativelycautious with that.
And then the modelling sort ofdoes all the thinking in the
background for us.
Okay.
Is it like an AI system you use?
It's not AI, no.
So we plug all the input in.
It's got all the tools in thebackground to work out the
inflation and forecasteverything forward.
(08:19):
Yeah.
And every client's different aswell.
Some of them have got theirspreadsheet and they know...
This is what they spend ondirect debits and this is what
the kids cost them and this iswhat they spend on food.
Some people haven't got a clue.
So, you know, at the hour, helpin the early stages varies quite
considerably depending on theclient.
Yeah, I have clients that youask them to fill out a schedule
(08:41):
of outgoings, a monthly outgoingschedule, and they really don't
know what the basic outgoings ofthe household are.
So it could be like the waterrates or the council tax, and
I'll get it back, and it'll belike question marks, and they
won't know.
I did one yesterday like that,and I was trying to then guess
and look at council tax rates intheir area, because we're doing
a four-mean, it needs to beaccurate.
So we have to sort of makeassumptions as well about what
(09:03):
their expenditure, and again,I'm conservative on that,
because...
I sort of over-assume what theirexpenditure might be sometimes
because, you know, only today inthe news, water rates are going
to be going up by£168 a year perhousehold on average.
And you have to be quite carefulwhen you're forecasting for the,
you know, you put on the form afuture cost.
Well, you know, electricity andgas have gone up fourfold in the
(09:26):
last three, four years.
It's very difficult.
We used to be able to put like£50 down for each and that would
be enough.
And now it's more like£200 downfor each.
And...
It's because that person mightnot have any knowledge at all
about what's going out of thejoint account, doesn't have any
visibility, or perhaps the billsare all being paid from their
spouse's account.
And it's shocking sometimes thatthey don't know what they spend
(09:46):
on food.
And it really makes our jobquite difficult.
And until we get the disclosurefrom the other side, then we get
a true picture.
But at that point, we've alreadyhad to do one for me.
So we've had to make assumptionsand then we get questions back
from the other side saying, howcan you assume that it's only
costing this?
I said, well, we didn't knowuntil we saw the bank
statements.
He or she has had no visibilityover what's been spent in this
(10:09):
house and sometimes it's a bitof a shock.
And only then can a financialadvisor assist, really, because
you need the figures of what theoutgoings are, if particularly,
say, the wife might want to stayin that home and perhaps she
didn't know what the expenditurewas.
the reality might hit home thatactually she can't afford to
stay in the family home, likeneeds to be sold.
(10:29):
And that's quite a commonscenario initially.
We often have to sort of centrecheck budgets as well.
So we look at them, the budgetsthat Clients might present to
us, we'll go through it, andoften there's categories which
refill are probably missing.
A common one is maintenance onthe house.
People don't think about thatbecause it's not a regular
(10:50):
outgoing, but actually if youown a home, there is going to be
regular maintenance that youneed to account for that needs
to do with your regularoutgoing.
We add that on our standard.
schedule that we send out toclients we have that on there
and sometimes they go what doyou mean i'm like well if you
had a roof repair once a year itwould cost this and it's there's
so many things that can go wrongyour washing machine can break
(11:11):
you might need a plumber yourboiler could pack him you have
to assume just like with a caras well you have to assume
repairs on an on an owned car ifit's not a lease or a where
you've got any service packageyou need to issue and there'll
be repairs or MOT charges.
So the list is so long aboutwhat they have to think about
and I think they really strugglesometimes in filling that in,
which is why then I have to sortof guess what they might spend
(11:34):
on a conservative basis.
But until you get to that point,you really don't know what
figures you're working with tohave an idea about what the
outgoings are versus the income.
I would go to ask as wellwith...
your reports how do you factorin longevity with men and women
how do you work that into yourreports we just do them both to
(11:57):
99 yeah I tend to go to 99 Imean you can also look at the
office of national statisticsyou get the average life
expectancy and then but we'dusually be cautious and go the
kind of the higher level becauseyou usually get three ages three
eight years on that yeah soyou'd usually go at the higher
one just again just for cautiouspurposes so you've got a
standard you'd go to 99 and youknow which is good but for
(12:19):
anyone yeah Okay.
And priorities as well.
So someone might come to you andsay, well, my absolute
non-negotiable is two holidays ayear.
It might be that once, you know,people having to maybe get a job
and they haven't had a jobbefore.
So they might need to scale backon some of these things.
Then once they've got a job,then maybe they can come back.
(12:39):
I think some clients do reallyget it and they understand that
the situation is changingsignificantly and they will need
to cut back.
and other clients aren't quitethere yet.
Yeah, we find this difficult tohave those conversations, but
for anyone in our space really,isn't it?
We have to have thoseconversations quite a lot, or
about going back to work, orincreasing hours at work to be
(13:02):
able to afford.
And actually that sometimes, ifyou're not working in a case,
but you can work, so thechildren are all at school, for
example, it doesn't look greatif you're asking for maintenance
if you're not working.
Even if you work part-time, doesyou wonders in your case and can
help your case for maintenancebecause yes there'll be an
acceptance that the onlycapacity just isn't there
compared to the other spouse sothe other spouse could earn six
(13:25):
figure salary never going toearn that i've been out of work
for 10 years perhaps don't havethe same skills or go trying to
get back into something theypreviously did no previous lie
the salary is going to be quitelow um but it If you do show
willing to work, even part-time,and you're claiming maintenance,
you have often a higher chanceof success on your maintenance
case.
Yeah.
(13:46):
And that's quite a commonfeature, and having those
conversations about going backto work are really difficult.
Really difficult.
I think that is where themodelling helps, because if
you're modelling someone'slifestyle and there is a clear
shortfall, being able to say,well...
Look, if you did get a job andyou were earning this much, look
at the difference it makes.
And I think that does help withthe reality check.
(14:09):
Same with expenditure.
If you're saying you need tospend this much, well, this is
what it actually looks like andthe money isn't there
necessarily.
But if you cut down to thismuch...
then you can sustain yourlifestyle.
So that, I think, helps with thereality check maybe.
Yeah.
And we'll run two or threedifferent scenarios, won't we?
And sometimes with jobs as well,if you've got a job and you've
perhaps turned X, this is howit's going to look.
(14:31):
But if you could perhaps work alittle bit more and then Y,
then, you know, it's a positiveeffect on the cash flows.
And it does help people kind ofthink about it.
Yeah.
Even increasing hours from threedays to four days a week, you
know, makes a huge difference.
Yeah.
it can do so that's somethingthat we always look at as well
(14:52):
with the assistance ofyourselves and then the other
side of things where we look atcases it's most involuntary
disclosure and also when you'rein court proceedings the court
wants you to obtain evidence ofyour mortgage capacity to see
what you could borrow.
So whether you're working or notworking, you still need to
produce a mortgage cap capacityreport, even if it says zero.
You still have to provide onefor the FDR hearing and the
(15:15):
final hearing.
And can you help people withmortgage capacity reports?
Yeah, definitely.
We write a lot.
for courts, and again, forvarying different types of
clients, some that aren'tworking, some that are based on
maintenance, because somelenders will take maintenance
into account in terms ofborrowing.
Obviously, it depends how muchthat maintenance is and how long
(15:37):
it's going on for as to what thelender's happy to include.
But there is an option for that.
When it's coupled with a job,it's seen as more favourable.
But yes, you've got both.
And then often we get asked towrite and comment on the other
side if there's a capacityreport come in in preparation
for the FDR from the other sidewe might get asked to write a
(15:59):
commentary on what we think youknow particularly if you're
perhaps thinking well that's notreally their mortgage capacity
or perhaps might be a bitdiscrepancy in the values second
time yeah that's great becausethat's Sometimes we get them
back and we think, oh, thatdoesn't look right.
You might have someone earningquite a significant amount and
the more capacity is quite low.
He's tactically low for thecase.
(16:21):
It's good to have a secondopinion.
Do the mortgage companies thattake into account child
maintenance, do they need acourt order, do you know?
Or can it be a child maintenanceassessment in accordance with
the child maintenance service aslong as they're in receipt of it
and it's going into their bankaccount?
So it depends on the lender.
Okay, and they all havedifferent criteria.
(16:42):
It's like with just standardborrowing with your base plus
commission or base plus bonus,they all have slightly different
criteria.
So I would always, in a report,include a range of what they
might be able to borrow.
But yes, so some lenders want tosee a stamped court order and
others want to see the lastthree months of it going in.
(17:02):
It makes more sense for them,and I'm not a financial advisor,
but or a mortgage advisor, butfrom the point of view, from our
point of view, a childmaintenance order is only
enforceable for 12 months in acourt order.
Then it falls back to the CNS, agovernment agency.
So if lenders want a courtorder, it doesn't really mean
very much.
(17:23):
It gives them a year ofsecurity.
You know, it depends if...
the person that's paying isgoing to pay.
If they don't pay, the order isonly enforceable for 12 months,
but then the jurisdiction fallsback with the CMS anyway.
And it is iffy because if theperson that's paying ends up
going self-employed, earns muchless money or puts less through
(17:45):
the books or is out of workcompletely, that just stops.
So it is risky for lenders.
I suppose maybe they'll lend ona shorter term.
It just depends on...
It really depends on the wholecity more ways, shouldn't it?
The way the person receivingmaintenance is also working.
Yeah, but their income's likelyto go up.
And it's supplementing it ratherthan the only...
Yeah, you know, in single arms,if somebody's, you know, earning
(18:07):
a low income, got highmaintenance, you wouldn't be
able to max out on theborrowing.
Yeah, maintenance, because it'stoo risky.
Exactly, because you get...
We have lots of situationswhere...
People apply to vary maintenanceorders or people come to us
because their ex has stoppedpaying and it's an enforcement
application, whether it bespousal maintenance in that
(18:29):
situation.
So it is risky.
And then even a change ofcircumstances for the payer.
So if they have more children,it will reduce the child
maintenance service rate forthem to pay for their other
children.
So you just don't know.
If you're a young family, thatcan happen.
So, yeah, it's quite difficult,a difficult job for you and, you
(18:53):
know, a lender.
Yeah, because whilst you'relooking for them to be able to
have the ability to borrow, youdon't want them to be able to
borrow too much and then end upin a nightmare situation.
Exactly, exactly.
And then multi-capacity reportsobviously prepare them and they
can be used in proceedings forsolicitors, which is really
helpful.
One thing I have...
(19:16):
noticed recently in cases aremortgage rates affecting the
ability of couples to separate,rehouse.
They may have been on a low dealfor a long time and then the
rates obviously jumped up andthey're kind of settling now at
a level, but they're never goingto be what they were.
And a lot of people this year,again, will be coming to the end
(19:39):
of those low 1% or below 1%deals and it'd be in difficulty
if they're thinking ofseparating.
if they're not thinking ofseparating, but if they're
thinking of separating, evenmore so.
So have you noticed that that'scausing issues for lots of your
clients in terms of being ableto separate their lives and buy
two homes, not one?
Yeah, definitely, definitely.
(20:00):
And, you know, you look back atsome of the reports that we were
doing four years ago andpeople's, you know, ability to
borrow and what those monthlyrepayments look like compared to
now.
You know, you have people beingable to borrow at 0.89 or
whatever, and now...
It's around 4%, ticky-tocky.
So it is a huge difference.
And it doesn't sound a lot, butit is on an average to large
(20:25):
mortgage.
That's a lot of money coming andmakes it unaffordable.
And I think actually it'strapping people in marriages at
the moment.
My sentiment probably isn'tshared, but I do think there's a
trend at the moment that thepeople aren't able to actually
move on.
Yeah, they can't actually do it.
without a huge drop in life spanwhich is what they have to then
(20:48):
think about which is really thereality it's awful for them but
I have noticed this January I'venoticed it more so and there's
not that drop I thought therewould be last year with the
mortgage rates and there isn'tgoing to be probably this year
either no they need to come downI don't think they'll come down
(21:10):
I'm not I don't work for theBank of England but you know I
don't think we'll ever see sub1% debt.
No.
But it'd be nice if it'd comedown to 2.5%.
People overstretched themselves.
But they didn't think they wereoverstretching themselves when
they were on 0.8 deals.
And now the reality is hittingthat it's a lot per month to
(21:33):
sustain, especially if you thinkyou're separating.
And as you said, there's a lotof people coming out of those
deals now.
Exactly.
Who are hoping that Reedsfordare going to be a bit of a real
crisis.
And, you know, it's reallydifficult.
and houses because of the ratesaren't really selling.
No.
(22:15):
The properties aren't selling,so they're stuck.
I mean, is that marital homestill waiting for the property
to sell?
Both of them are living there.
We have a case just like that,actually.
And the house has been on themarket for over 12 months.
And it's now been reduced.
The problem is you have a RICSreport on a final hearing which
says it's worth this amount.
And actually, the reality isit's not sold.
(22:36):
So you're dropping it.
And then it's affecting thewhole settlement.
So again, your services wouldcome in again to say, actually,
how much can we actually dropthis house so I could afford it?
Yeah.
to live and I'm finding itdifficult where perhaps they've
had an order previously fouryears ago whenever it was that
says they're to receive aspecific lump sum from the house
(22:57):
which then crushes down what theother person's going to get so
they're reluctant to reduce theprice if it's a split on
percentages it's easier andfairer but if you've got someone
say well I'm going to be gettinglet's say for example there's
200,000 in a house and someone'sreceiving 150 of that Well,
that's all that might be left ifyou're dropping your house
(23:17):
price, just as an example.
So that can happen as well.
And then now let's talk a littlebit more about pensions and how
you can help solicitors withpension sharing.
So typically in a divorce, youwill have a situation where one
person will have a higherpension.
pension pot than the other,perhaps because they'd worked
(23:38):
more or had a better job, orthey're older, and that needs to
be shared on divorce with theother person to equalise
pensions in retirement.
At the first stage, we may getactuaries to do a report on what
percentage of the pension wouldneed to be transferred to
equalised pensions.
There might be multiple pots.
(24:01):
And those reports are really...
difficult to read for anyonewho's not an actuary they're
really you know they're verycomplex and technical um and
sometimes we need financialadvisors to interpret them for
us so is that something that youcan do with clients yeah
absolutely so pensions are sortof my forte um so yeah i'm very
(24:21):
kind of okay at looking throughthe pension reports um
understand like breaking themdown and picking out the key
points and helping explain thatSometimes I just go to the
conclusion and think, I'll readthat first and see, and then
I'll read back through the wholereport and try and make sense of
it.
But it's often the case I doneed a financial advisor on the
case.
(24:42):
They're so lengthy.
There's so much information inthere.
It's hard to pull out the keythings.
It is.
Multiple calculations as well.
Different ages.
Sometimes you'll have acalculation for age.
separating out the pre-maritalpension versus the pension
(25:03):
accrued during the marriage.
So there can be four or fivecalculations in the reports,
which judges do not like, by theway.
The MP may still ask formultiple calculations.
I understand why.
Yeah, so that can be quitedifficult.
You get reports about 60, 70pages long and they cost a lot
of money to do.
But you do need them.
(25:24):
We can't advise on pensionsharing.
We can't, you know, we're notable to, we're not financially
qualified.
So we do obviously need helpfrom pension actuaries or
advisors and financial advisorsas well.
And I think it's highlightingthat.
Advantages and disadvantages ofeach option.
Yes.
And particularly when you mighthave someone where part of the
pot's been crystallised, so partof it's been used or some of the
(25:47):
tax-free cash has been used.
All of that impacts what happensnext.
Do you ever find that onespouse, perhaps someone without
much of a pension, had no ideathat their spouse had taken such
a huge lump sum at the pointthey could crystallise part of
it?
Yeah, and it's very difficult tohave those conversations as well
with people who have got themajority of the pension because
(26:10):
part of it will have beenaccrued before they even met
usually.
And you do get it sometimeswhere the person without the
large pension will sort of sitback and go, oh yes, they should
keep their pension.
They're attached to it.
And also I think thatparticularly with final salary
pensions, defined benefitpensions, where it's a
(26:31):
guaranteed income for life, alot of time people don't realise
the value in those pension potsand how valuable they actually
are.
And so that's part of our roleas well, it's explaining that
actually there is a there's bigvalue in that pension because
you could have a situation wherethere's no pension sharing that
then you've just got the statepension to rely on may not have
(26:51):
full contribution to that eitherso they may not get the full
state pension and you have umsomeone with a final salary
pension multiple pots and canlive very comfortably 60 plus
and the other person's reallygoing to struggle um And that's
how I sort of explain it topeople.
Look, if you'd stayed married,this is the life style you'd
(27:12):
have had.
But, you know, you've beenmarried for 30 plus years.
Sometimes you're convincingpeople to seek a pension share,
believe it or not.
They're very much, I don't wantto touch it, it's theirs.
Other times it's very different.
It's rare with pensions that yousee someone, well, a couple,
(27:33):
just, you know, willing to...
go to an actuary and get areport to share it, very rare.
Sometimes a pension's what'sworse more than the marital
home.
Absolutely, yeah.
And I think that goes back tothe modelling as well.
So being able to show thesituation or a time and, you
know, for people who are saying,oh, I don't want to touch the
pension, that's okay, they cankeep that.
Or actually, yeah, this is thedifference it will make.
(27:56):
Or also modelling, okay, well,if you offset the pension...
That works right now, but youneed to be aware that in
retirement it looks like this.
So what would it look like ifperhaps you bought a smaller
property and retained your shareof the pension?
Does that look better overall inthe long term?
And it's then their decisionwhether they do that option or
they do the, I'll have the bighouse now, less pension and
(28:18):
downsize if I need to.
And sometimes people,particularly if they're maybe
still in their 40s and they'vegot 20 years to work, they're a
bit happier to have Less pensionbecause I think, well, I'm going
to go back to work and I didhave a good job before, so
actually I've got time to putmoney back in that pension.
But right now, a bigger home forme and the kids is more
(28:41):
favourable.
So everybody's situation isslightly different, whereas if
somebody's kids have grown upand gone, then actually they
don't need their bigger house,they need more to pension.
They need more to pension.
So it's the production of thepension advisory group report.
They've got two reports now.
I've noticed that judges are...
Even on a consensual basis, whenwe send a consent order in which
(29:01):
doesn't provide for adequatepension, they are rejecting
consent orders on the basis thatthere's not adequate pension
provision.
More and more than I've everseen before.
And even if parties are youngand have got 20, 30 years ahead
of them in their careers and canbuild up the pension, judges are
still reluctant to rubber stampan order which does not share
the pension that they'vereceived.
(29:22):
from their spouse that they'veperhaps been in a marriage for
say 10 years, got youngchildren.
Even in that scenario, a judgeis very reluctant to proper
stamp an order and you findyourselves how if you've got a
client who's particularly set intheir ways and has said, look,
this is what I want.
I want to keep more of the housenow.
I don't want the pension now.
This is what is important to meright now.
(29:42):
And you explain why.
the rationales of the judge inthe D81 form that we have to
send in, which is a detailedform of the snapshot of what
they've agreed and what theirassets are.
Even if you explain to the bestof your abilities, still getting
knocked back and sometimes askedto go to a hearing just so the
judge knows that the personwho's giving up their right to
pension knows what they'redoing.
(30:03):
And that is called a mentionhearing.
And we have them more and more.
That's really interesting.
It is.
I've noticed it quite a lotrecently, more than ever.
I think there's been, yeah,since the pension advisory
report, it's just, yeah,pensions are just a hot topic,
aren't they?
They are.
People realise now how importantthey are and what big value they
can represent as part of thetotal pot.
(30:24):
Completely.
And there's, you know, there's,When we were talking about
calculations before ofcalculating what someone earned
by way of pension before themarriage and people tried to
exclude that from thecalculation, that isn't
favourable with courts.
So it's the Pension AdvisoryGroup report because it says in
(30:44):
the report that in a case wherethe needs require the pension to
be shared.
So perhaps the other person hasno pension at all.
So of course needs require thepension to be shared.
The post and pre-separationaccrual should not be taken into
account.
It's just a whole pot.
It doesn't matter.
And also the length of themarriage isn't given as much
weight as it used to be.
So if it's a short marriage,you're still looking at
(31:05):
potentially receiving anequalising pension share.
which is a big shock to somepeople.
But unless you're going to tryand agree out of court, you
could be faced with the riskthat it's within the possibility
that a judge will order anequalisation of pensions.
It's within the realm ofpossibilities, and that's the
risk of litigation.
And that report hasn't reallyhelped those people who want to
(31:28):
keep hold of pension, perhapsthat they, in some cases, were
paying into before their spousewas even born, when you've got
an age gap.
Yeah, in a couple, but thathappens.
I've had people say, peopleemail say, I brought this
pension into the marriage, but Iowned half of it before my
spouse was even born.
That situation, and it seems sounfair, but if it's a needs
(31:52):
case, then unfortunately itwould have to be shared.
And you just hope that thosecases can sort of come to a deal
without having to spendthousands getting to that point
with a judge face with thatreality and having to order
whether that happens or not.
And what we've seen withpensions as well recently is the
delay in obtaining NHS pensions.
Teachers pensions are stilltaking a long time.
(32:14):
When I'm talking about that, I'mtalking about the time it takes
to wait for the cash equivalentto come through so that you can
help work out what's in thepension and needs to be divided.
So they're taking, I think lastyear we had one that took nine
months on an NHS scheme to comethrough because they all had to
be recalculated as a result ofthe case.
some case law and therefore itwas taking much longer.
(32:37):
It's really hard and it reallydelays people moving on with
their lives, doesn't it?
They're just stuck waiting forpension reports and cash
equivalency.
It can take months.
Even in a best case scenario,when you can obtain pension
reports, it can still take threeto four months.
So you factor in public sectorwaiting times.
It took us nearly a year on aparticular case to get to that
(32:58):
point.
And then you're trying tonegotiate at that point.
And then if you have to issueproceedings anyway, you're
really far down the line.
So you're not ideal, but thingsare improving slightly.
But with teachers' pensions, Ihave still noticed quite a delay
on getting the reports back, theCVs.
Yeah.
I think often as well, peopledon't think about the pensions
(33:19):
till nearer the end of the day.
And so we've had a clientrecently and...
You know, the assessment isbasically agreed.
And then it was, oh, we're justgoing to split the cash
equivalent values.
And then we pointed out that itwas a defined benefit pension.
And perhaps they should lookinto that in a bit more detail
and get a report, which they'renow doing.
(33:40):
But they were sort of all readyto do the consent order.
And now they're waiting.
On an offsetting to that basis,yes, they want their cash.
You just pay up a pound of that.
Yes, half a pound.
Yes, easily.
And they can do that, don'tthey, or not?
And it's really not possible,no.
Some pension schemes are worthmuch more than they say all the
tin.
Absolutely, yeah.
We've had, and also just withthe CEVs that come back
(34:00):
previously, probably pre-withoutfor NHS pensions, we were
getting second opinions onthose.
They were coming back threetimes higher because they
weren't factoring in the CPI andthe price increases.
Yeah, so it was difficult toeven just rely on the NHS
scheme, yeah, and see thesethemselves.
And at least that's what theactuaries will do.
They'll look at the actual CEand then say, yeah, Make sure it
(34:23):
definitely makes sense.
The safest option is always toget some financial advice and an
actuarial advice if needed.
I think so, yeah.
So that's something that cropsup on most cases if the parties
are willing to go down thatroute.
So if they don't want to go downthat route, we have to get
parties to sign disclaimersbecause we can't be held
responsible for money that theycould have achieved in
(34:46):
settlement that they choose toignore.
So...
With that situation where youhave got someone who's sort of
thinking, well, I don't want totouch the pension.
Do you forecast for them thenwhat life would look like
without it?
You can get reality checks andthen maybe they change their
minds.
Yeah, that's exactly what we do.
Yeah.
And say, look, this is whatretirement looks like.
(35:06):
Yeah.
You know, we do forecast ifthey're able, if they're going
to be working and saving towardsa pension, we put all of that
in.
But yeah, it's just, you know,you might need to downsize
before retirement to free upsome money.
But sometimes even if you dothat, it could still be a
shortfall.
It's a lie.
Yeah, because it's a long time.
You think you're retiring inyour 60s.
(35:28):
If you're forecasting to 99,it's a long time to...
Yeah, especially if theexpectations of holidays and
things are there and lifestyleand university costs for
children and with the ageing.
and people having childrenlater, they're often retiring
around the time that theirchildren will be going off to
university, and that's a hugeexpense to factor in.
(35:50):
Yeah.
I mean, university fees now, Ithink, going up with the loans,
I think it's£100,000 for acourse, and it's so much money
sometimes.
It's really expensive, and theaccommodation, even if the child
themselves gets a loan for thecourse, you've still got the
accommodation, and themaintenance grants are on quite
(36:11):
a low level.
You know, not everybody getsthat.
And I think that expectationversus reality, yes, is quite a
lot of conversations that wehave.
There are some that we're givingpeace of mind to, like we said
earlier, but a lot of the timeit's about readjusting the
expectation that the childrenmight not be able to stay in
private education all the waythrough.
(36:33):
The holidays might need tochange slightly, other type of
holidays, because...
the dual income isn't thereanymore you've got to split that
into running two homes I supposeit's just so important to get
forecasting at the beginningfrom both the pensioners point
of view and from a generalaffordability point of view
about what life will look likeand that merely assists with
(36:56):
negotiations and in some casesyou might have a case where
there is the money there to dothis but the other side perhaps
is very reluctant to sharethings on an equal basis or
share things at all or perhapsit's predominantly and you might
have a business owner managerwho a lot of the money's tied up
in the business there's lots ofmoney there could be a
multi-million pound businessshareholding could be worth
(37:16):
millions but the actual cashisn't there straight away so we
have situations where we mightsettle but it's on the drip so
you'll have a lump sum byinstallments being paid over the
five years and that's somethingto think about as well in terms
of forecasting if you there'sany uncertainty about that lump
sum being paid or so it's Whenmoney is tied up in that way,
(37:39):
it's often a result.
Often the result is a lump sum,payable by installments or a
series of lump sums.
So sometimes the money is there,but it's hard to get at.
It's just about finding creativeways.
And if you can find those ways,cases can settle.
What's really nice for us withcases, if a client is a bit
(38:03):
beside themselves at thebeginning, doesn't know how
they're...
going to work or how themaintenance, you know, how
they're going to live on it andwe'll run the modelling and
really, we end up coaching themquite a lot as well, don't we?
Yeah.
And then once you've taken themthrough that whole process and
they've settled and then seeingthem again six months later and
actually, oh yeah, everythingyou said, yeah, actually, I can
(38:24):
live on this and I'm doing okay,yeah, and I'm holiday free and
seeing the change in themmentally is really nice.
Yeah, it's really good.
And I suppose that means thatyou can help them throughout
their life and they'll come backto you in years to come from
Yeah, I think with a lot ofclients, we start working with
(38:44):
them in the beginning and thenwe work with them
post-settlement as well.
So yeah, once they've got theirpot, whether it be a pension
share or...
capital amount we then work withthem to get it invested to be
put into the right pensioninvested in line with their time
frame and what their plans areand generating the income they
need sometimes in the most taxefficient way our work doesn't
(39:08):
stop when they've settled infact it carries on and we get to
sort of work with them as theirlife progresses and they start
their new chapter yeah it's niceand that's people say I don't
know how you do your job butit's actually really rewarding
because I see like you You seepeople come out of the other
side of a traumatic experienceand they're much happier than
they were when they came to seeme a year ago, whatever it was.
(39:30):
And it is quite rewarding inthat sense.
And you get to live that, liveit through with them even beyond
that point of separation andfinishing the consent order or
the court order.
You get to see them for muchlonger.
So that's really nice.
Say it is really good going onthat journey with them, isn't
it?
Yeah.
And also knowing when you meetnew people at the beginning of
(39:52):
the journey, being able to say,you know, this will get better
and you will understand allthese figures.
And it's really overwhelmingright now, but it will start to
feel better.
And that's part of our job is tomake you feel less overwhelmed
and to help you to understandwhat your future looks like.
I think that's something I'vegot to say at the beginning as
well.
It's...
(40:12):
Yeah, some people have alreadysort of gone through that trauma
some time ago and they may haveseparated years before and it's,
you know, they'll come to it.
It's very factual, but others itmight just be really recent and
something I always say to peopleis that you'll look back and
you'll think how far you've comeand your life will be very
different in a good way.
(40:32):
It's always the case.
I haven't seen anyone come outof it, you know, in a worse
state than they started becauseit's the worst point when you...
first to go to see a solicitoror anyone to do with separation.
You may not have seen asolicitor before in your life,
may not have been to asolicitor's office.
It's really daunting.
So it is a rewarding job in thatsense.
I love helping people like youdo, especially people in that
(40:55):
situation.
But thank you very much forcoming in to talk to me today.
It's been really insightful.
I really enjoyed our chat.
UNKNOWN (41:06):
Thank you.
Hello everyone, welcome to My Family Pod.
I'll be speaking to JennyMacDonald-Sykes and Liz Grimshaw
of Revival Financial Planningabout the importance of
(00:21):
financial planning in divorce,cash play modelling, mortgages
and pensions.
UNKNOWN (00:27):
Music
SPEAKER_00 (00:30):
Hello, everyone.
I'm here today with Liz Brimshawand Jenny MacDonald-Sykes from
Revival Financial Planning.
If you'd like to introduceyourself, ladies.
Yeah.
So, hi, I'm Jenny.
Thanks for having us here today.
I am a chartered financialadvisor and I've been working as
a financial advisor for many,many years.
And about four years ago, Lizand I met, didn't we?
(00:55):
And we both sort of decided wehad a bit of a passion for
wanting to help people make themost of their money and
particularly help people withsort of divorce financial
planning.
Morning, I'm Liz.
Thanks.
Yeah, thanks for having us.
So I retrained as a financialadvisor about five years ago,
just about the time just beforeI met Jenny.
(01:16):
And as a career change for me,I'd worked in the city, but
wanted to retrain and dosomething different.
And yeah, Jenny and I met at aworkplace and we chatted about
the difference in you knowdifferent specialisms that we
could have within financialadvice and we both decided that
actually we could make quite abig difference when people are
going through divorce orbuilding a new financial plan
(01:36):
for the future.
Brilliant and that's how we knoweach other because obviously at
Myerson I'm a family lawyer andwe have a family team here
specialising in divorce andfamily separation and often need
your services to help with ourclients going through that and
the financial advice they needat the beginning and the middle
and the end of that process.
and how we can help each other,what we'll talk about now.
(01:59):
So divorce and the division offinancial assets often requires
assistance from financialplanners, financial advisors,
especially when it comes to cashflow modeling for a client.
So for example, they are in asituation where they are looking
to divide their assets andtrying to negotiate a settlement
with their spouse.
They may or may not be in courtproceedings by this point, but
(02:22):
they are looking at figures.
So, for example, they're lookingat selling the house and they
might have a cash sum and a lumpsum payment coming to them or
hopefully coming to them.
And they want to see how muchthey need to be able to move on
with their lives.
And that's where they need acash flow forecast for their
future they might be looking at.
They might be in their 40s or50s.
(02:42):
They might have young children.
They might be looking to retirein the next 10, 20 years.
And they really want to see howmuch money that they will need
from their divorce to be able tohave a comfortable standard of
living if possible.
And that applies to both husbandand wife, both sides.
So tell me about how you canhelp those people going through
separation who need cash flowforecasting.
(03:05):
And what does that involve fromyour point of view?
How much detail do you need togo into?
And what does a cash flow modellook like?
So every client's different.
Everybody's situation'sdifferent.
Sometimes we might be looking togive someone peace of mind.
Sometimes they might need a bitof a reality check.
But the way that we work is thatwe would talk to them about
their current income andoutgoings.
(03:26):
And it may be that following thedivorce, that would look a
little bit different becausethey might be needing to sell a
family home or whatever, again,depending on the situation.
So we'd look at income,outgoings, all of their assets,
and then we'd run a model andshow that, right, okay, this is
where you're at.
This is perhaps a proposedsettlement, or these are the
(03:48):
ideas that you can put forwardin terms of a settlement.
And it's often a three-wayconversation, isn't it?
Genuine looking, like, you know,with the client, with the
solicitor, this is what'sperhaps realistic in terms of a
percentage split.
Family home, assets, pensions.
and then model that and seewhere the gaps are.
Perhaps the client might need toadjust their expectations in
(04:10):
terms of spending, or it may bethat they need to push for a bit
more in terms of pension share.
We can advise that.
And we often run several models,don't we?
Yeah.
I'm going to ask about themodels and how many models you
might get us to run.
I think because often we getinvolved at the beginning of the
process.
So then we might be running theinitial models and, you know,
(04:30):
this is what we think or this iswhat they think settlement might
look like.
But then with all the back andforth and the negotiations, it's
sort of, OK, well, the otherside has offered this.
How does that look?
Yeah.
Will I be OK with that sort ofsettlement?
UNKNOWN (04:43):
Yeah.
SPEAKER_00 (04:44):
it's not quite right so we're going to go back and
offer this how does that lookand it's just giving that peace
of mind of not just what thejust what the figures are
because sometimes the figuresthemselves are quite
overwhelming but putting thatinto a model that's visual that
allows someone to see what thelong-term outlook looks like and
that actually in most cases theyare going to be okay they might
(05:06):
have to adjust expectations alittle bit but actually they're
going to be okay going forwardsort of making sense of those
blunt figures there sometimesand then sense do they um Are
they sort of long reports orthey used, I'm guessing they'll
be user friendly, not just forsolicitors, but for the actual
client themselves so they cansee in black and white how much
(05:26):
money they would have on ayearly basis, for example, if
they, you know, to supplementtheir income.
Yeah, I mean, the reports, thekind of model that we show run
from their age today up to 90,99.
And so it's kind of, you know, awhole lifespan.
And they're often veryconservative in terms of
spending and also asset andinvestment growth.
(05:48):
You don't know what's going tohappen in the market.
You have to be conservative inthese things.
Exactly.
And then we'll run severalmodels and then we put those
into a report.
But we run them.
Put them into a pot, but thenwe'll have either an in-person
meeting or a Zoom meeting andrun through it with the client
to make sure that theyunderstand.
And then that report is passedto the solicitor as well so they
(06:08):
can see our different options.
And sometimes they've had anoffering from the other side and
we'll model those as well.
And then they can see how thatlooks.
Okay, that's good.
And what sort of questionswould...
A typical client of yours asksthose things.
They ask things like, will I beable to afford a house?
Or will I run out of money?
Or will I be able to retire byage 55?
(06:30):
Do you get these sorts ofquestions?
Bullseye.
Yeah, definitely.
Will I run out of money isprobably your biggest question.
Will I have enough?
And I think, what doesretirement look like?
Because it's all very wellworrying about the situation
right now.
But actually, what does it looklike?
10, 15, 20 years down the roadand will I have to downsize at
(06:51):
some point to make things work?
Yeah, those are all commonquestions.
Yeah, and that must be quite acommon part of someone's plan.
Potentially if they've got youngchildren and they have a big
house at the moment, some peoplemust think I am going to
downsize when the children areat uni or after that point in
life.
although that's a harsh realityof it.
(07:13):
I think more and more I'm seeingthat people are factoring that
downsizing into their cash flowforecasts.
I think they have to.
I think the cost of living isexpensive.
Exactly.
And if people are on the youngerside when they're getting
divorced and they need thatshare of the family home to be a
bit larger and perhaps take alesser percentage of the
(07:33):
pension, then we factor indownsizing and we model that
quite often, don't we?
Yeah, yeah, yeah.
Because you've got to factorin...
the potential price increase oftheir current property.
It must be so difficult to dothat from your point of view, to
forecast that and then forecastthe house price rises in the
next 10, 20 years.
It's very difficult.
Yeah, I mean, obviously we haveto use assumptions in terms of
(07:56):
property growth.
And again, we're relativelycautious with that.
And then the modelling sort ofdoes all the thinking in the
background for us.
Okay.
Is it like an AI system you use?
It's not AI, no.
So we plug all the input in.
It's got all the tools in thebackground to work out the
inflation and forecasteverything forward.
(08:19):
Yeah.
And every client's different aswell.
Some of them have got theirspreadsheet and they know...
This is what they spend ondirect debits and this is what
the kids cost them and this iswhat they spend on food.
Some people haven't got a clue.
So, you know, at the hour, helpin the early stages varies quite
considerably depending on theclient.
Yeah, I have clients that youask them to fill out a schedule
(08:41):
of outgoings, a monthly outgoingschedule, and they really don't
know what the basic outgoings ofthe household are.
So it could be like the waterrates or the council tax, and
I'll get it back, and it'll belike question marks, and they
won't know.
I did one yesterday like that,and I was trying to then guess
and look at council tax rates intheir area, because we're doing
a four-mean, it needs to beaccurate.
So we have to sort of makeassumptions as well about what
(09:03):
their expenditure, and again,I'm conservative on that,
because...
I sort of over-assume what theirexpenditure might be sometimes
because, you know, only today inthe news, water rates are going
to be going up by£168 a year perhousehold on average.
And you have to be quite carefulwhen you're forecasting for the,
you know, you put on the form afuture cost.
Well, you know, electricity andgas have gone up fourfold in the
(09:26):
last three, four years.
It's very difficult.
We used to be able to put like£50 down for each and that would
be enough.
And now it's more like£200 downfor each.
And...
It's because that person mightnot have any knowledge at all
about what's going out of thejoint account, doesn't have any
visibility, or perhaps the billsare all being paid from their
spouse's account.
And it's shocking sometimes thatthey don't know what they spend
(09:46):
on food.
And it really makes our jobquite difficult.
And until we get the disclosurefrom the other side, then we get
a true picture.
But at that point, we've alreadyhad to do one for me.
So we've had to make assumptionsand then we get questions back
from the other side saying, howcan you assume that it's only
costing this?
I said, well, we didn't knowuntil we saw the bank
statements.
He or she has had no visibilityover what's been spent in this
(10:09):
house and sometimes it's a bitof a shock.
And only then can a financialadvisor assist, really, because
you need the figures of what theoutgoings are, if particularly,
say, the wife might want to stayin that home and perhaps she
didn't know what the expenditurewas.
the reality might hit home thatactually she can't afford to
stay in the family home, likeneeds to be sold.
(10:29):
And that's quite a commonscenario initially.
We often have to sort of centrecheck budgets as well.
So we look at them, the budgetsthat Clients might present to
us, we'll go through it, andoften there's categories which
refill are probably missing.
A common one is maintenance onthe house.
People don't think about thatbecause it's not a regular
(10:50):
outgoing, but actually if youown a home, there is going to be
regular maintenance that youneed to account for that needs
to do with your regularoutgoing.
We add that on our standard.
schedule that we send out toclients we have that on there
and sometimes they go what doyou mean i'm like well if you
had a roof repair once a year itwould cost this and it's there's
so many things that can go wrongyour washing machine can break
(11:11):
you might need a plumber yourboiler could pack him you have
to assume just like with a caras well you have to assume
repairs on an on an owned car ifit's not a lease or a where
you've got any service packageyou need to issue and there'll
be repairs or MOT charges.
So the list is so long aboutwhat they have to think about
and I think they really strugglesometimes in filling that in,
which is why then I have to sortof guess what they might spend
(11:34):
on a conservative basis.
But until you get to that point,you really don't know what
figures you're working with tohave an idea about what the
outgoings are versus the income.
I would go to ask as wellwith...
your reports how do you factorin longevity with men and women
how do you work that into yourreports we just do them both to
(11:57):
99 yeah I tend to go to 99 Imean you can also look at the
office of national statisticsyou get the average life
expectancy and then but we'dusually be cautious and go the
kind of the higher level becauseyou usually get three ages three
eight years on that yeah soyou'd usually go at the higher
one just again just for cautiouspurposes so you've got a
standard you'd go to 99 and youknow which is good but for
(12:19):
anyone yeah Okay.
And priorities as well.
So someone might come to you andsay, well, my absolute
non-negotiable is two holidays ayear.
It might be that once, you know,people having to maybe get a job
and they haven't had a jobbefore.
So they might need to scale backon some of these things.
Then once they've got a job,then maybe they can come back.
(12:39):
I think some clients do reallyget it and they understand that
the situation is changingsignificantly and they will need
to cut back.
and other clients aren't quitethere yet.
Yeah, we find this difficult tohave those conversations, but
for anyone in our space really,isn't it?
We have to have thoseconversations quite a lot, or
about going back to work, orincreasing hours at work to be
(13:02):
able to afford.
And actually that sometimes, ifyou're not working in a case,
but you can work, so thechildren are all at school, for
example, it doesn't look greatif you're asking for maintenance
if you're not working.
Even if you work part-time, doesyou wonders in your case and can
help your case for maintenancebecause yes there'll be an
acceptance that the onlycapacity just isn't there
compared to the other spouse sothe other spouse could earn six
(13:25):
figure salary never going toearn that i've been out of work
for 10 years perhaps don't havethe same skills or go trying to
get back into something theypreviously did no previous lie
the salary is going to be quitelow um but it If you do show
willing to work, even part-time,and you're claiming maintenance,
you have often a higher chanceof success on your maintenance
case.
Yeah.
(13:46):
And that's quite a commonfeature, and having those
conversations about going backto work are really difficult.
Really difficult.
I think that is where themodelling helps, because if
you're modelling someone'slifestyle and there is a clear
shortfall, being able to say,well...
Look, if you did get a job andyou were earning this much, look
at the difference it makes.
And I think that does help withthe reality check.
(14:09):
Same with expenditure.
If you're saying you need tospend this much, well, this is
what it actually looks like andthe money isn't there
necessarily.
But if you cut down to thismuch...
then you can sustain yourlifestyle.
So that, I think, helps with thereality check maybe.
Yeah.
And we'll run two or threedifferent scenarios, won't we?
And sometimes with jobs as well,if you've got a job and you've
perhaps turned X, this is howit's going to look.
(14:31):
But if you could perhaps work alittle bit more and then Y,
then, you know, it's a positiveeffect on the cash flows.
And it does help people kind ofthink about it.
Yeah.
Even increasing hours from threedays to four days a week, you
know, makes a huge difference.
Yeah.
it can do so that's somethingthat we always look at as well
(14:52):
with the assistance ofyourselves and then the other
side of things where we look atcases it's most involuntary
disclosure and also when you'rein court proceedings the court
wants you to obtain evidence ofyour mortgage capacity to see
what you could borrow.
So whether you're working or notworking, you still need to
produce a mortgage cap capacityreport, even if it says zero.
You still have to provide onefor the FDR hearing and the
(15:15):
final hearing.
And can you help people withmortgage capacity reports?
Yeah, definitely.
We write a lot.
for courts, and again, forvarying different types of
clients, some that aren'tworking, some that are based on
maintenance, because somelenders will take maintenance
into account in terms ofborrowing.
Obviously, it depends how muchthat maintenance is and how long
(15:37):
it's going on for as to what thelender's happy to include.
But there is an option for that.
When it's coupled with a job,it's seen as more favourable.
But yes, you've got both.
And then often we get asked towrite and comment on the other
side if there's a capacityreport come in in preparation
for the FDR from the other sidewe might get asked to write a
(15:59):
commentary on what we think youknow particularly if you're
perhaps thinking well that's notreally their mortgage capacity
or perhaps might be a bitdiscrepancy in the values second
time yeah that's great becausethat's Sometimes we get them
back and we think, oh, thatdoesn't look right.
You might have someone earningquite a significant amount and
the more capacity is quite low.
He's tactically low for thecase.
(16:21):
It's good to have a secondopinion.
Do the mortgage companies thattake into account child
maintenance, do they need acourt order, do you know?
Or can it be a child maintenanceassessment in accordance with
the child maintenance service aslong as they're in receipt of it
and it's going into their bankaccount?
So it depends on the lender.
Okay, and they all havedifferent criteria.
(16:42):
It's like with just standardborrowing with your base plus
commission or base plus bonus,they all have slightly different
criteria.
So I would always, in a report,include a range of what they
might be able to borrow.
But yes, so some lenders want tosee a stamped court order and
others want to see the lastthree months of it going in.
(17:02):
It makes more sense for them,and I'm not a financial advisor,
but or a mortgage advisor, butfrom the point of view, from our
point of view, a childmaintenance order is only
enforceable for 12 months in acourt order.
Then it falls back to the CNS, agovernment agency.
So if lenders want a courtorder, it doesn't really mean
very much.
(17:23):
It gives them a year ofsecurity.
You know, it depends if...
the person that's paying isgoing to pay.
If they don't pay, the order isonly enforceable for 12 months,
but then the jurisdiction fallsback with the CMS anyway.
And it is iffy because if theperson that's paying ends up
going self-employed, earns muchless money or puts less through
(17:45):
the books or is out of workcompletely, that just stops.
So it is risky for lenders.
I suppose maybe they'll lend ona shorter term.
It just depends on...
It really depends on the wholecity more ways, shouldn't it?
The way the person receivingmaintenance is also working.
Yeah, but their income's likelyto go up.
And it's supplementing it ratherthan the only...
Yeah, you know, in single arms,if somebody's, you know, earning
(18:07):
a low income, got highmaintenance, you wouldn't be
able to max out on theborrowing.
Yeah, maintenance, because it'stoo risky.
Exactly, because you get...
We have lots of situationswhere...
People apply to vary maintenanceorders or people come to us
because their ex has stoppedpaying and it's an enforcement
application, whether it bespousal maintenance in that
(18:29):
situation.
So it is risky.
And then even a change ofcircumstances for the payer.
So if they have more children,it will reduce the child
maintenance service rate forthem to pay for their other
children.
So you just don't know.
If you're a young family, thatcan happen.
So, yeah, it's quite difficult,a difficult job for you and, you
(18:53):
know, a lender.
Yeah, because whilst you'relooking for them to be able to
have the ability to borrow, youdon't want them to be able to
borrow too much and then end upin a nightmare situation.
Exactly, exactly.
And then multi-capacity reportsobviously prepare them and they
can be used in proceedings forsolicitors, which is really
helpful.
One thing I have...
(19:16):
noticed recently in cases aremortgage rates affecting the
ability of couples to separate,rehouse.
They may have been on a low dealfor a long time and then the
rates obviously jumped up andthey're kind of settling now at
a level, but they're never goingto be what they were.
And a lot of people this year,again, will be coming to the end
(19:39):
of those low 1% or below 1%deals and it'd be in difficulty
if they're thinking ofseparating.
if they're not thinking ofseparating, but if they're
thinking of separating, evenmore so.
So have you noticed that that'scausing issues for lots of your
clients in terms of being ableto separate their lives and buy
two homes, not one?
Yeah, definitely, definitely.
(20:00):
And, you know, you look back atsome of the reports that we were
doing four years ago andpeople's, you know, ability to
borrow and what those monthlyrepayments look like compared to
now.
You know, you have people beingable to borrow at 0.89 or
whatever, and now...
It's around 4%, ticky-tocky.
So it is a huge difference.
And it doesn't sound a lot, butit is on an average to large
(20:25):
mortgage.
That's a lot of money coming andmakes it unaffordable.
And I think actually it'strapping people in marriages at
the moment.
My sentiment probably isn'tshared, but I do think there's a
trend at the moment that thepeople aren't able to actually
move on.
Yeah, they can't actually do it.
without a huge drop in life spanwhich is what they have to then
(20:48):
think about which is really thereality it's awful for them but
I have noticed this January I'venoticed it more so and there's
not that drop I thought therewould be last year with the
mortgage rates and there isn'tgoing to be probably this year
either no they need to come downI don't think they'll come down
(21:10):
I'm not I don't work for theBank of England but you know I
don't think we'll ever see sub1% debt.
No.
But it'd be nice if it'd comedown to 2.5%.
People overstretched themselves.
But they didn't think they wereoverstretching themselves when
they were on 0.8 deals.
And now the reality is hittingthat it's a lot per month to
(21:33):
sustain, especially if you thinkyou're separating.
And as you said, there's a lotof people coming out of those
deals now.
Exactly.
Who are hoping that Reedsfordare going to be a bit of a real
crisis.
And, you know, it's reallydifficult.
and houses because of the ratesaren't really selling.
No.
(22:15):
The properties aren't selling,so they're stuck.
I mean, is that marital homestill waiting for the property
to sell?
Both of them are living there.
We have a case just like that,actually.
And the house has been on themarket for over 12 months.
And it's now been reduced.
The problem is you have a RICSreport on a final hearing which
says it's worth this amount.
And actually, the reality isit's not sold.
(22:36):
So you're dropping it.
And then it's affecting thewhole settlement.
So again, your services wouldcome in again to say, actually,
how much can we actually dropthis house so I could afford it?
Yeah.
to live and I'm finding itdifficult where perhaps they've
had an order previously fouryears ago whenever it was that
says they're to receive aspecific lump sum from the house
(22:57):
which then crushes down what theother person's going to get so
they're reluctant to reduce theprice if it's a split on
percentages it's easier andfairer but if you've got someone
say well I'm going to be gettinglet's say for example there's
200,000 in a house and someone'sreceiving 150 of that Well,
that's all that might be left ifyou're dropping your house
(23:17):
price, just as an example.
So that can happen as well.
And then now let's talk a littlebit more about pensions and how
you can help solicitors withpension sharing.
So typically in a divorce, youwill have a situation where one
person will have a higherpension.
pension pot than the other,perhaps because they'd worked
(23:38):
more or had a better job, orthey're older, and that needs to
be shared on divorce with theother person to equalise
pensions in retirement.
At the first stage, we may getactuaries to do a report on what
percentage of the pension wouldneed to be transferred to
equalised pensions.
There might be multiple pots.
(24:01):
And those reports are really...
difficult to read for anyonewho's not an actuary they're
really you know they're verycomplex and technical um and
sometimes we need financialadvisors to interpret them for
us so is that something that youcan do with clients yeah
absolutely so pensions are sortof my forte um so yeah i'm very
(24:21):
kind of okay at looking throughthe pension reports um
understand like breaking themdown and picking out the key
points and helping explain thatSometimes I just go to the
conclusion and think, I'll readthat first and see, and then
I'll read back through the wholereport and try and make sense of
it.
But it's often the case I doneed a financial advisor on the
case.
(24:42):
They're so lengthy.
There's so much information inthere.
It's hard to pull out the keythings.
It is.
Multiple calculations as well.
Different ages.
Sometimes you'll have acalculation for age.
separating out the pre-maritalpension versus the pension
(25:03):
accrued during the marriage.
So there can be four or fivecalculations in the reports,
which judges do not like, by theway.
The MP may still ask formultiple calculations.
I understand why.
Yeah, so that can be quitedifficult.
You get reports about 60, 70pages long and they cost a lot
of money to do.
But you do need them.
(25:24):
We can't advise on pensionsharing.
We can't, you know, we're notable to, we're not financially
qualified.
So we do obviously need helpfrom pension actuaries or
advisors and financial advisorsas well.
And I think it's highlightingthat.
Advantages and disadvantages ofeach option.
Yes.
And particularly when you mighthave someone where part of the
pot's been crystallised, so partof it's been used or some of the
(25:47):
tax-free cash has been used.
All of that impacts what happensnext.
Do you ever find that onespouse, perhaps someone without
much of a pension, had no ideathat their spouse had taken such
a huge lump sum at the pointthey could crystallise part of
it?
Yeah, and it's very difficult tohave those conversations as well
with people who have got themajority of the pension because
(26:10):
part of it will have beenaccrued before they even met
usually.
And you do get it sometimeswhere the person without the
large pension will sort of sitback and go, oh yes, they should
keep their pension.
They're attached to it.
And also I think thatparticularly with final salary
pensions, defined benefitpensions, where it's a
(26:31):
guaranteed income for life, alot of time people don't realise
the value in those pension potsand how valuable they actually
are.
And so that's part of our roleas well, it's explaining that
actually there is a there's bigvalue in that pension because
you could have a situation wherethere's no pension sharing that
then you've just got the statepension to rely on may not have
(26:51):
full contribution to that eitherso they may not get the full
state pension and you have umsomeone with a final salary
pension multiple pots and canlive very comfortably 60 plus
and the other person's reallygoing to struggle um And that's
how I sort of explain it topeople.
Look, if you'd stayed married,this is the life style you'd
(27:12):
have had.
But, you know, you've beenmarried for 30 plus years.
Sometimes you're convincingpeople to seek a pension share,
believe it or not.
They're very much, I don't wantto touch it, it's theirs.
Other times it's very different.
It's rare with pensions that yousee someone, well, a couple,
(27:33):
just, you know, willing to...
go to an actuary and get areport to share it, very rare.
Sometimes a pension's what'sworse more than the marital
home.
Absolutely, yeah.
And I think that goes back tothe modelling as well.
So being able to show thesituation or a time and, you
know, for people who are saying,oh, I don't want to touch the
pension, that's okay, they cankeep that.
Or actually, yeah, this is thedifference it will make.
(27:56):
Or also modelling, okay, well,if you offset the pension...
That works right now, but youneed to be aware that in
retirement it looks like this.
So what would it look like ifperhaps you bought a smaller
property and retained your shareof the pension?
Does that look better overall inthe long term?
And it's then their decisionwhether they do that option or
they do the, I'll have the bighouse now, less pension and
(28:18):
downsize if I need to.
And sometimes people,particularly if they're maybe
still in their 40s and they'vegot 20 years to work, they're a
bit happier to have Less pensionbecause I think, well, I'm going
to go back to work and I didhave a good job before, so
actually I've got time to putmoney back in that pension.
But right now, a bigger home forme and the kids is more
(28:41):
favourable.
So everybody's situation isslightly different, whereas if
somebody's kids have grown upand gone, then actually they
don't need their bigger house,they need more to pension.
They need more to pension.
So it's the production of thepension advisory group report.
They've got two reports now.
I've noticed that judges are...
Even on a consensual basis, whenwe send a consent order in which
(29:01):
doesn't provide for adequatepension, they are rejecting
consent orders on the basis thatthere's not adequate pension
provision.
More and more than I've everseen before.
And even if parties are youngand have got 20, 30 years ahead
of them in their careers and canbuild up the pension, judges are
still reluctant to rubber stampan order which does not share
the pension that they'vereceived.
(29:22):
from their spouse that they'veperhaps been in a marriage for
say 10 years, got youngchildren.
Even in that scenario, a judgeis very reluctant to proper
stamp an order and you findyourselves how if you've got a
client who's particularly set intheir ways and has said, look,
this is what I want.
I want to keep more of the housenow.
I don't want the pension now.
This is what is important to meright now.
(29:42):
And you explain why.
the rationales of the judge inthe D81 form that we have to
send in, which is a detailedform of the snapshot of what
they've agreed and what theirassets are.
Even if you explain to the bestof your abilities, still getting
knocked back and sometimes askedto go to a hearing just so the
judge knows that the personwho's giving up their right to
pension knows what they'redoing.
(30:03):
And that is called a mentionhearing.
And we have them more and more.
That's really interesting.
It is.
I've noticed it quite a lotrecently, more than ever.
I think there's been, yeah,since the pension advisory
report, it's just, yeah,pensions are just a hot topic,
aren't they?
They are.
People realise now how importantthey are and what big value they
can represent as part of thetotal pot.
(30:24):
Completely.
And there's, you know, there's,When we were talking about
calculations before ofcalculating what someone earned
by way of pension before themarriage and people tried to
exclude that from thecalculation, that isn't
favourable with courts.
So it's the Pension AdvisoryGroup report because it says in
(30:44):
the report that in a case wherethe needs require the pension to
be shared.
So perhaps the other person hasno pension at all.
So of course needs require thepension to be shared.
The post and pre-separationaccrual should not be taken into
account.
It's just a whole pot.
It doesn't matter.
And also the length of themarriage isn't given as much
weight as it used to be.
So if it's a short marriage,you're still looking at
(31:05):
potentially receiving anequalising pension share.
which is a big shock to somepeople.
But unless you're going to tryand agree out of court, you
could be faced with the riskthat it's within the possibility
that a judge will order anequalisation of pensions.
It's within the realm ofpossibilities, and that's the
risk of litigation.
And that report hasn't reallyhelped those people who want to
(31:28):
keep hold of pension, perhapsthat they, in some cases, were
paying into before their spousewas even born, when you've got
an age gap.
Yeah, in a couple, but thathappens.
I've had people say, peopleemail say, I brought this
pension into the marriage, but Iowned half of it before my
spouse was even born.
That situation, and it seems sounfair, but if it's a needs
(31:52):
case, then unfortunately itwould have to be shared.
And you just hope that thosecases can sort of come to a deal
without having to spendthousands getting to that point
with a judge face with thatreality and having to order
whether that happens or not.
And what we've seen withpensions as well recently is the
delay in obtaining NHS pensions.
Teachers pensions are stilltaking a long time.
(32:14):
When I'm talking about that, I'mtalking about the time it takes
to wait for the cash equivalentto come through so that you can
help work out what's in thepension and needs to be divided.
So they're taking, I think lastyear we had one that took nine
months on an NHS scheme to comethrough because they all had to
be recalculated as a result ofthe case.
some case law and therefore itwas taking much longer.
(32:37):
It's really hard and it reallydelays people moving on with
their lives, doesn't it?
They're just stuck waiting forpension reports and cash
equivalency.
It can take months.
Even in a best case scenario,when you can obtain pension
reports, it can still take threeto four months.
So you factor in public sectorwaiting times.
It took us nearly a year on aparticular case to get to that
(32:58):
point.
And then you're trying tonegotiate at that point.
And then if you have to issueproceedings anyway, you're
really far down the line.
So you're not ideal, but thingsare improving slightly.
But with teachers' pensions, Ihave still noticed quite a delay
on getting the reports back, theCVs.
Yeah.
I think often as well, peopledon't think about the pensions
(33:19):
till nearer the end of the day.
And so we've had a clientrecently and...
You know, the assessment isbasically agreed.
And then it was, oh, we're justgoing to split the cash
equivalent values.
And then we pointed out that itwas a defined benefit pension.
And perhaps they should lookinto that in a bit more detail
and get a report, which they'renow doing.
(33:40):
But they were sort of all readyto do the consent order.
And now they're waiting.
On an offsetting to that basis,yes, they want their cash.
You just pay up a pound of that.
Yes, half a pound.
Yes, easily.
And they can do that, don'tthey, or not?
And it's really not possible,no.
Some pension schemes are worthmuch more than they say all the
tin.
Absolutely, yeah.
We've had, and also just withthe CEVs that come back
(34:00):
previously, probably pre-withoutfor NHS pensions, we were
getting second opinions onthose.
They were coming back threetimes higher because they
weren't factoring in the CPI andthe price increases.
Yeah, so it was difficult toeven just rely on the NHS
scheme, yeah, and see thesethemselves.
And at least that's what theactuaries will do.
They'll look at the actual CEand then say, yeah, Make sure it
(34:23):
definitely makes sense.
The safest option is always toget some financial advice and an
actuarial advice if needed.
I think so, yeah.
So that's something that cropsup on most cases if the parties
are willing to go down thatroute.
So if they don't want to go downthat route, we have to get
parties to sign disclaimersbecause we can't be held
responsible for money that theycould have achieved in
(34:46):
settlement that they choose toignore.
So...
With that situation where youhave got someone who's sort of
thinking, well, I don't want totouch the pension.
Do you forecast for them thenwhat life would look like
without it?
You can get reality checks andthen maybe they change their
minds.
Yeah, that's exactly what we do.
Yeah.
And say, look, this is whatretirement looks like.
(35:06):
Yeah.
You know, we do forecast ifthey're able, if they're going
to be working and saving towardsa pension, we put all of that
in.
But yeah, it's just, you know,you might need to downsize
before retirement to free upsome money.
But sometimes even if you dothat, it could still be a
shortfall.
It's a lie.
Yeah, because it's a long time.
You think you're retiring inyour 60s.
(35:28):
If you're forecasting to 99,it's a long time to...
Yeah, especially if theexpectations of holidays and
things are there and lifestyleand university costs for
children and with the ageing.
and people having childrenlater, they're often retiring
around the time that theirchildren will be going off to
university, and that's a hugeexpense to factor in.
(35:50):
Yeah.
I mean, university fees now, Ithink, going up with the loans,
I think it's£100,000 for acourse, and it's so much money
sometimes.
It's really expensive, and theaccommodation, even if the child
themselves gets a loan for thecourse, you've still got the
accommodation, and themaintenance grants are on quite
(36:11):
a low level.
You know, not everybody getsthat.
And I think that expectationversus reality, yes, is quite a
lot of conversations that wehave.
There are some that we're givingpeace of mind to, like we said
earlier, but a lot of the timeit's about readjusting the
expectation that the childrenmight not be able to stay in
private education all the waythrough.
(36:33):
The holidays might need tochange slightly, other type of
holidays, because...
the dual income isn't thereanymore you've got to split that
into running two homes I supposeit's just so important to get
forecasting at the beginningfrom both the pensioners point
of view and from a generalaffordability point of view
about what life will look likeand that merely assists with
(36:56):
negotiations and in some casesyou might have a case where
there is the money there to dothis but the other side perhaps
is very reluctant to sharethings on an equal basis or
share things at all or perhapsit's predominantly and you might
have a business owner managerwho a lot of the money's tied up
in the business there's lots ofmoney there could be a
multi-million pound businessshareholding could be worth
(37:16):
millions but the actual cashisn't there straight away so we
have situations where we mightsettle but it's on the drip so
you'll have a lump sum byinstallments being paid over the
five years and that's somethingto think about as well in terms
of forecasting if you there'sany uncertainty about that lump
sum being paid or so it's Whenmoney is tied up in that way,
(37:39):
it's often a result.
Often the result is a lump sum,payable by installments or a
series of lump sums.
So sometimes the money is there,but it's hard to get at.
It's just about finding creativeways.
And if you can find those ways,cases can settle.
What's really nice for us withcases, if a client is a bit
(38:03):
beside themselves at thebeginning, doesn't know how
they're...
going to work or how themaintenance, you know, how
they're going to live on it andwe'll run the modelling and
really, we end up coaching themquite a lot as well, don't we?
Yeah.
And then once you've taken themthrough that whole process and
they've settled and then seeingthem again six months later and
actually, oh yeah, everythingyou said, yeah, actually, I can
(38:24):
live on this and I'm doing okay,yeah, and I'm holiday free and
seeing the change in themmentally is really nice.
Yeah, it's really good.
And I suppose that means thatyou can help them throughout
their life and they'll come backto you in years to come from
Yeah, I think with a lot ofclients, we start working with
(38:44):
them in the beginning and thenwe work with them
post-settlement as well.
So yeah, once they've got theirpot, whether it be a pension
share or...
capital amount we then work withthem to get it invested to be
put into the right pensioninvested in line with their time
frame and what their plans areand generating the income they
need sometimes in the most taxefficient way our work doesn't
(39:08):
stop when they've settled infact it carries on and we get to
sort of work with them as theirlife progresses and they start
their new chapter yeah it's niceand that's people say I don't
know how you do your job butit's actually really rewarding
because I see like you You seepeople come out of the other
side of a traumatic experienceand they're much happier than
they were when they came to seeme a year ago, whatever it was.
(39:30):
And it is quite rewarding inthat sense.
And you get to live that, liveit through with them even beyond
that point of separation andfinishing the consent order or
the court order.
You get to see them for muchlonger.
So that's really nice.
Say it is really good going onthat journey with them, isn't
it?
Yeah.
And also knowing when you meetnew people at the beginning of
(39:52):
the journey, being able to say,you know, this will get better
and you will understand allthese figures.
And it's really overwhelmingright now, but it will start to
feel better.
And that's part of our job is tomake you feel less overwhelmed
and to help you to understandwhat your future looks like.
I think that's something I'vegot to say at the beginning as
well.
It's...
(40:12):
Yeah, some people have alreadysort of gone through that trauma
some time ago and they may haveseparated years before and it's,
you know, they'll come to it.
It's very factual, but others itmight just be really recent and
something I always say to peopleis that you'll look back and
you'll think how far you've comeand your life will be very
different in a good way.
(40:32):
It's always the case.
I haven't seen anyone come outof it, you know, in a worse
state than they started becauseit's the worst point when you...
first to go to see a solicitoror anyone to do with separation.
You may not have seen asolicitor before in your life,
may not have been to asolicitor's office.
It's really daunting.
So it is a rewarding job in thatsense.
I love helping people like youdo, especially people in that
(40:55):
situation.
But thank you very much forcoming in to talk to me today.
It's been really insightful.
I really enjoyed our chat.
UNKNOWN (41:06):
Thank you.
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