Your Pension Pot and Divorce, dividing up the assets.
In April Chancellor George Osborne provided the over-55’s the freedom to cash in their qualifying pension pots and take control of their lifetime savings.
We are increasingly finding that our clients who previously considered divorce but were put off by financial constraints are now deciding to press ahead.
Sometimes pensions can be the largest marital asset, exceeding the value of the family home.
We regularly find that, during a divorce, each spouse is keen to ensure they can afford a home of their own following settlement. With the changes allowing individuals the option to release funds from a pension pot early it may help relieve the financial burden of finding the deposit for a new property.
Courts have often granted one partner the pensions and savings while the other retains the family home to ensure an even split. Alternatively, the pension itself may be divided to give each partner roughly equal retirement income. Both methods have caused problems in the past because couples couldn’t access their pension until age 65 at the earliest.
Pension freedom can provide an option to divide up the family assets without necessarily having to sell the family home. Alternatively, some pension assets can now be converted into cash from age 55 which may make it easier to rehouse both spouses.
Divorce is a complicated area and when pensions are involved the need for specialist legal and financial advice from the outset is even greater.
Whilst the pension reforms will provide greater control and flexibility for many, it is important that bespoke advice is obtained, to ensure that whatever settlement is considered will suit each party’s changed circumstances both now and in the future.
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Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.
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