Do you discuss your finances with your nearest and dearest?
In many families, having a frank discussion about wealth still remains a taboo.
However, with younger people needing to learn the money management skills that will stand them in good stead throughout their lives, and the older generation often requiring help with their finances in their later years, it’s important for children and parents of any age to be able to communicate effectively about family wealth issues.
Overcoming the barriers
Some families find it difficult to discuss wealth. It’s not uncommon even today for married couples not to know how much money their spouse earns. Well-off parents can sometimes shy away from letting their children know too much about their wealth, in an effort to prevent them becoming complacent about what they might inherit in the years to come and losing their work ethic. Older people don’t always like to dwell too much on the future, finding it difficult and distressing to raise issues like death and inheritance with their loved ones.
However, taking the time to discuss important financial matters with other family members will help to ensure that the right financial plans are in place to safeguard family interests.
Here to help
Openly discussing wealth matters with your family and us can help establish priorities, clarify goals and ensure that plans are put in place to support each generation according to their financial needs. We are increasingly being asked to be part of these conversations, not least because we offer sound practical advice in a dispassionate manner.
If you’d like us to help your family, then please do get in touch.
Women risk becoming pension poor on divorce
There are no hard and fast rules governing how assets should be divided when a couple divorces, although there is a broad starting point of 50:50.
However, new research* shows that women who divorce can often end up with less than half the property wealth of married couples and less than one third of the average pension wealth.
The study showed that the average divorced woman over 50 has pension wealth of £131,000 compared with £454,000 for the average married couple.
Dividing pension assets
Many people think that on divorce a pension solely belongs to the party who is named on the policy, but that’s not the case. A pension has to be considered along with other financial assets owned by the couple when reaching a financial settlement.
Pension assets can be apportioned in various ways:
- Offsetting the value of one spouse’s fund by transferring a lump sum, or other assets, to the other spouse
- Splitting the pension fund into two separate pensions
- Arranging that when a pension comes to be paid, a portion goes to the other spouse.
Getting the right advice at the right time
The findings underline the need to get both legal and financial advice when considering how marital assets should be divided on divorce. A pension pot can often represent a substantial sum of money and needs to be considered alongside other major assets such as property. Post-divorce, it makes sense to discuss your revised circumstances with us. You’ll need to reconsider your financial goals, and review your mortgage, pension and investment plans, plus remake your Will. Reorganising your finances can represent a major step in moving forward to a new life.
*Royal London, 2019
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.