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Financial planning when a relationship ends

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When a marriage or civil partnership ends, along with any other assets, it is crucial to consider any pensions that may be in place. The value of these could make a great difference to your financial settlement. If you are not married or in a civil partnership you will have no legal right to any of your partner’s pension at the moment, although moves to change this law are under consideration.

There are three ways that pensions could be used as part of a settlement.

  • Pension offsetting
  • Pension attachment
  • Pension Sharing

Dawn Chisholm from our Family Team explains “Pension offsetting is when the value of one partner’s pension is ‘offset’ against the value of the couple’s other assets, for example, property. If one partner keeps the pension the other partner will receive something of equal value. Pension sharing is when the value of your partner’s pension at the time of divorce is shared between both of you. The court may decide that one partner should have a greater share than the other. A pension attachment means that you would receive an agreed percentage of your partner’s pension when it is paid to them, either as a regular payment or a lump sum. This is only payable while your ex-partner is still alive and any order for regular payments would cease if you remarry.”

Divorcing or ending a civil partnership will also affect any will you may have made. Your former spouse or civil partner will not inherit anything under your will, as they are treated by the law as having died before you for inheritance purposes. Your ex-partner may also have been appointed as your executor but will not be able to carry out this task if you have divorced. If you have any questions about any of the issues raised here, please contact us, as we will be happy to answer questions over the phone or meet with you for a free initial meeting.

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