How can advisers help protect assets from previous marriages?

This article is part of
Guide to financial advice for later-life marriage

How can advisers help protect assets from previous marriages?

Marriages might be made in heaven but savings accounts are harder-won and easily lost, especially where families are concerned.

Divorces are on the rise in the UK, according to the Office for National Statistics (ONS).

Latest data on divorce, published in 2017, stated there were 106,959 divorces of opposite-sex couples in 2016, an increase of 5.8 per cent compared with 2015. There were also 112 divorces of same-sex couples in 2016; of these 78 per cent were among female couples.

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And with divorce and remarriage comes difficulty, not just emotionally and practically (who will the kids stay with on the bank holiday weekend? Whose house should we go to for Christmas?) but also financially. 

Financial advisers and solicitors have been working more closely than ever to help clients through the legal and financial complexities of divorce, remarriage, pension splitting, inheritance and estate planning.

It is a lucrative industry; figures from family justice organisation Resolution, published in a report earlier this year in partnership with the Personal Finance Society, said the divorce market is worth approximately £500m a year.

However, the nine-page report, Unlock the Divorce and Separation Market: a £500m Opportunity for Financial Advisers, cited a "growing need" for specialist financial advisers in family law.

The report said only 42 financial adviser specialists were currently accredited in family law, which leaves "just one professional for every 5,000 potential clients".

Aside from this opportunity to specialise and capitalise on the divorce market, there are important things all advisers should consider when helping clients who remarry later in life.

Jane Finnerty, joint chairperson of the Society of Later Life Advisers, comments: "Often, later-life marriages are between people who both have their own assets and homes, etc. 

"Therefore it's a matter of managing those assets so that, on death, they benefit the beneficiaries they choose - which isn't necessarily each other."

Will writing

Helen Medhurst-Jackson, financial planning director at Investec Wealth & Investment, cites this as a priority. She explains: "Clients should write a new will and be specific about their wishes.

"It is also prudent to set up a lasting power of attorney (POA) at the same time."

If this is not something your advisory practice offers, Keith Richards, chief executive of the Personal Finance Society, advocates: "Encourage clients to seek advice in respect of rewriting an existing will."

He also strongly believes clients should be encouraged to create a POA, so their wishes can be acted upon in the event of lack of mental capacity at some future point. 

"In the case of divorce, if someone has chosen their spouse as sole POA, the existing lasting POA will be revoked. It’s therefore important to make sure any lasting POA is kept up-to-date," he cautions.

Ms Finnerty adds: "Well-drawn-up wills are essential. A lot of couples forget that, even if they have been together for years, they need a will. Also, step-children from a previous marriage may miss out otherwise."