Divorce or separation can be a traumatic and emotional time. Apart from the emotional upheaval, it often involves severe changes from a lifestyle and financial perspective.
Whilst sound legal advice is important to the overall process, a licensed financial adviser will provide financial advice on the specific investments to be included in a property settlement, covering issues such as risk/return, tax and liquidity. This is complimentary to the work of a solicitor and can help ensure the best overall outcome.
A financial adviser will also assist with cash flow projections to see how an individual’s situation would look over the course of their lifetime, to assess the pros and cons of a property settlement offer. This approach can be useful in assisting both parties to move forward to an agreement, particularly where there is confidence that future lifestyle needs will be appropriately provided for.
Given that property settlements often trigger a need for financial advice (e.g. superannuation and/or other money to be invested), rather than waiting until the property settlement is finalised, a financial adviser should ideally be involved early in the negotiations while there is still an opportunity to have input into determining the optimal mix of assets.
Once the property settlement has been finalised, the focus turns to the efficient transfer of assets. Working with the solicitors, a financial adviser will assist with the transfer of superannuation and other investments, including set-up of any new entities to ensure there is a smooth transition to the next phase of life.
Other considerations include creating an investment strategy appropriate to future needs and ensuring that ongoing income needs are met. In this regard, the cash flow projections mentioned above will help to set the framework for a future financial plan. Any life insurance cover should also be reviewed, and nominated beneficiaries of insurance policies and superannuation accounts updated where appropriate.
If you have any questions on the above, please feel free to contact a BDO Private Wealth expert.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings, etc., as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances.
The financial product advice or information in this document is of general nature only and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser, whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.