Archive for February, 2020

Financial Planning During Divorce

Posted by Sam Binstead

No one likes to think about getting divorced – but it’s the sad truth that 10.6% of marriages and civil partnerships will end in divorce. True, these rates are the lowest they’ve been for the past 50 years, but it’s not avoidable for everyone. Going through a divorce is a difficult time, and you have a lot of things to think about at each stage. But having a financial plan in place can help secure your future and give you peace of mind about life after the divorce. So today we wanted to share some of the financial steps you should consider when going through a divorce.

Get Organised

It can be difficult to organise and get a firm grip on your finances in a divorce, especially if they have been shared, or if you weren’t responsible for them during the marriage. But one of the things you will be asked to do when going through divorce proceedings to complete a detailed financial statement, so you need to get stuck in at some point. And sooner is better than later. A financial adviser can help you fill in the right forms (Form E), but the more organised you are with information before that meeting the simpler the process will be, and the less the help will cost. This also often proves to be a very empowering step for individuals going through a divorce, and its good preparation for one again having singular responsibility for your finances post-divorce.

Fully Disclose

When going through divorce proceedings, full disclosure during negotiations is essential. This means full disclosure of all financial assets and income before, during and after the marriage. Failure to disclose can happen due to one of two things:

  • It could be a deliberate (and ill-conceived) effort to keep certain assets outside of a divorce settlement, or;
  • It could happen by mistake, for example due to a pension provider not providing annual statements, leading to a pension asset not being disclosed.

Either way, failure to disclose has serious legal consequences, including significant future litigation costs.

If you can (and if it’s sensible), it’s a good idea to talk to your estranged spouse to ensure that, as far as possible, you put into effect any tax planning opportunities available to married couples prior to divorce. It might sound odd, but jointly achieving tax efficiency before you reach a divorce settlement is likely to increase the value of assets available to both of you. This is particularly important for any assets that are subject to potential Capital Gains Tax liability. This is where a financial adviser is worth their weight in gold, as they can help you create a financial strategy that benefits both of you.

Don’t Be Scared Of Pensions

Of all the financial issues you come across during divorce, one of the most complicated is pensions. But don’t be afraid of them – and certainly don’t hide from them. The main reason for this is because after the main residence, accrued pension entitlement is the most significant family asset, and both parties are jointly entitled to pension assets, regardless of whether one party to the marriage may have accrued significantly more than the other. There are a lot of technical terms, loopholes and strategies you can use to handle this, and your financial adviser will become your best friend here.

Take Time To Reflect And Plan

Once a divorce settlement has been reached, many people are relieved to have finally got to the end of the road. However, this is often the point when you need further financial help in dealing with any financial settlements – for example the purchasing of a new property, investing a cash sum or a pension sharing credit. So, while there might be a temptation to get on with the rest of your life and make decisions as soon as possible, try not to rush. Take some time to let everything sink in, reflect, and work on a solid financial plan that will help provide for the future you want.

At Chilvester Financial, we want to be here to support you through all the highs and lows of life. We understand that while taking ownership of your finances before, during and after a divorce might seem like a daunting thing, taking just a few simple steps with an adviser behind you will help you achieve your future lifestyle goals. If you would like help, support or just some information, please get in touch with the team at Chilvester Financial today.

4 Things You Can Do For Your Business That You Might Be Paying For Personally

Posted by Sam Binstead

At Chilvester Financial, we are all about efficiency. More specifically, we want to make sure you are running your business as efficiently as possible, minimising the tax you pay and ensuring you are in the best position financially, while staying on the right side of the law. This includes correcting a very common mistake business owners make – that if you run your own business, you don’t have to pay for everything yourself. In fact, it’s often more efficient to pay for certain things through your business – it just depends on what your business is, and what the expense is. So today, we wanted to highlight 4 things that you, as the director of your company, might be paying for personally, but could be paying for through the business.

Your Life Insurance

If you’re paying into a life insurance policy privately, then firstly, great! Life insurance is a must-have for adults, especially if you have a spouse or children who depend on you. But did you know you can still get all the benefits of your current life insurance (and some extras) by putting it through the business? A few of the personal insurance policies you can take out on yourself through the business include:

  • Income Protection – covers the cost of your income if you can’t work due to long-term illness or injury.
  • Life Insurance – The same as a personal life insurance policy, but premiums are paid by the business.
  • Death in Service – Pays out up to 5 times your salary if you die while in the employment of your company.

We talk more about what these insurances do and their benefits in this article.

Pension Contributions

As an employer, you need to be enrolled in some form of pension scheme. However, if it’s just you, you may have declined enrolment (which you are perfectly entitled to do) to keep costs down. However, if you’re already paying into a private pension, it’s worth considering paying those contributions through the business. Doing this is much more tax efficient, as it reduces your company’s taxable profits, and therefore your Corporation Tax liability. In fact, in most cases it’s usually more tax-efficient than making the contributions yourself! Talk to your financial adviser about the best company pension plan for you.

Private Medical Insurance

Private medical insurance is something everyone could benefit from, but most people don’t think about until it’s too late. With the right private medical care you could get access to high-quality care, skip long NHS queues for treatment and save money on routine appointments like dental and optical too. If you’re thinking about private healthcare for yourself and your family, then why not put it through the business? While it is classed as a P11D benefit, you and your family can get access to great healthcare and comprehensive cover in a more financially efficient way. Plus if you have employees, it’s a great benefit to offer them as well. We talk more about the pros and cons of private medical insurance here.

Basic Expenses

It’s always worth going back to basics, and this means making sure you’re claiming everything you can through the business and not paying for it out of your own pocket. This means looking at your spending and checking things like:

  • Mileage
  • Stationary
  • Rent and bills (through Use of Home)
  • Equipment
  • Capital Allowances

When you break it down, there are a lot of little, basic things that you are probably paying for from personal finances that really should be coming from the business. Now is the time to go back through the bank statements and work out what those are, moving things where you can and making changes to ensure your expenses are as efficient as possible.

At Chilvester Financial, we want to help you be successful in all aspects of life, including business. That’s why we work closely with you to tweak and change the way you currently do things to make them more efficient, and benefit you. We pride ourselves on offering independent, impartial advice. We also understand how small businesses work, and what is important to you, which means we can tailor our advice to suit you, your business and your goals. If you would like to find out more, just get in touch with the team today.

Your Investment Checklist

Posted by Sam Binstead

Here’s a news flash for you – investing can be for everyone. A lot of people think that investing is only for people who already have a lot of money to flash around, and just want to make themselves a little more comfortable. But that’s not true at all. In fact, if you’re smart and get your investments in place early, it can set you up for a stable, secure financial future. You just have to be smart about it. So if you’re thinking about it, here are a few things you need to think about before you start an investment plan.

Have Long Term Goals

There is no point investing any money if you don’t know what you want to achieve. And while short term goals are great as a saving incentive, long-term goals are what drives investment success. So take a look at your life and what you want to achieve, and ask yourself what is your long term goal? Is it buying a house? Travelling the world? Your dream car? Try to think at least 5 years into the future when setting your goal. This goal will then become the thing that guides all of your decisions, and will help you work out what the best investment strategy for you might be.

Start An Emergency Fund

Investing is a good way to build up capital for yourself, but it shouldn’t come at the expense of savings. After all, sometimes life is unpredictable, and you will face a few ‘oh ****’ moments where some easy to access cash will be essential. Medical bills, vets bills, car breaking down, replacing damaged equipment, or even covering living costs if you should lose your job. So before you start down the route of investment, it’s worth building up a savings buffer for emergencies. £1,000 is often thrown around as an ideal figure, but that’s a bit prescriptive. Work out what feels achievable and right for you, and aim for that.

Deal With Your Expensive Debts

If you’re looking to build up a stash of money, having debt is not a good way to go about it. A few little bits of debt here and there won’t hurt, and it’s important for building up good credit, but expensive debts hanging over you will always make you question why you’re saving, when you could be cutting it down. To be clear, we don’t mean student loans here! Instead, we mean any big debts you might have, like large credit card bills or outstanding loans.

Have A Pension (And Make The Most Of It)

Nowadays a lot of people aren’t thinking about setting up a private pension until later in life – but a pension will be one of your greatest assets in your retirement, and the sooner you start investing in it, the more valuable it will be. So yes, it’s a bit boring, but sorting out a pension that delivers great returns is super important and should be your first step in terms of investment. So, if you don’t have a private pension yet, get one set up and start stashing all the free money you’re entitled to. If you’re not sure how to do that, have a chat with a financial adviser to find out your options.

Boost Your Emergency Fund

If you already have some savings in place – that’s great! But it might be worth giving them a boost, just in case. This should ideally be different from your emergency fund (though it doesn’t have to be), and instead be a pot of quick-access cash you have on hand if you should need it. Before you start investing, try to boost your savings account to cover 3-6 months of living expenses to be fully secure. This is a lot of work, and you might need to work out how to scale back your expenses to make it happen, as well as what you would do if the worst should happen.

At Chilvester Financial, we are here to give you independent financial advice when you need it, on anything from pensions to investments strategies and general financial planning. Our team are on hand to talk through your unique circumstances, understand what your goals are and help develop a plan that will help you achieve those goals. If you would like to find out more, just get in touch with the team today.

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