Is it me, or is the whole of the UK waiting for the sword of the Governments Comprehensive Spending Review to fall and make the proposed cuts that so many print pages have been exhausted over in the last few months. Whichever way the cuts are made, I am sure that it is not going to be a pretty sight on the 20th October 2010. Let’s see what George Osborne has to say.
In a simplistic way, any business manager or owner will tell you that there are only two real ways of managing a business. One is to keep costs low and income high. Sprinkle some cash flow in between and away you go. Balancing the budget of the UK is likely to be very much more complicated, throwing in things such as additional bouts of quantitative easing and keeping our sterling currency sound, however, the principals are the still similar.
This is all very interesting to economists, but what does it mean to the person on the Omnibus? Clearly cuts are likely to lead to reduced spending and this may lead to cost cutting with the reduction of manpower. Redundancy, unemployment, severance packages and employment are likely to be key words in the winter and not for the right reasons. I am sure the employment solicitors/lawyers will be busy! All gloomy reading, but what can the person on the Omnibus do to help ensure that he or she is financially ready if this is to be last trip on the bus for a while?
Returning to the analogy of how a business works, they can entertain the same logic of looking at reducing or cutting outgoings and increasing income. I have expanded on this below with a few examples, although this list is not exhaustive:
Budgeting
Irrespective of your circumstances, it is always worthwhile looking at your household budget to ensure that you are extracting value from your outgoings. It’s worth doing this regularly and don’t wait for a redundancy to arrive to find out that you can’t afford to make ends meet.
Your household will need to ‘buy in’ to the process, and keep your debts under control and make sure you maintain an emergency deposit fund of 3-6 months income available to meet any short term liabilities as they arise. You might want to use a Cash ISA (ISA) arrangement to achieve this, or, as an alternative, Premium Bonds, which offer tax free winnings. If your spouse has a lower income tax band than you then you might want to consider having any taxable savings in their name.
Income
If you are fortunate enough to have a few investments behind you then check if these can provide you with income if needed. You might want to leave any pension benefits untouched until you retire, but seek independent financial advice (IFA) if you have this potential fallback position. Approximately half way through the tax year 2010/2011, as October is, might be a good time to review your ISA’s and Capital Gains Tax position (CGT) if you have one and make any necessary changes to meet you current circumstances and any future situations.
Summary
Whatever happens, as we move into these times of austerity, make sure that you keep your financial planning up to date and ready to meet your needs.
This should not be seen as individual advice and you should speak to your independent financial adviser about your individual circumstances and needs.
To expand on the issues of business planning for SME’s and the fundamentals, I have been able to outline the full process in my new book, Sign Here, Here and Here!…Journey of a Financial Adviser.
Further details of this are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com
Keith Churchouse, Chartered Financial Planner
Director of Churchouse Financial Planning Limited, High Street, Guildford, Surrey
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
Tuesday, 12 October 2010
Saturday, 2 October 2010
Redundancy, a life junction?
Having been made redundant twice myself in the past, I know that this situation can be emotional, stressful and daunting. Sadly, with the current austerity cuts proposals of the coalition Government in their comprehensive spending review, we may see an increase in this situation occurring.
If you find yourself in this position, then it might be worth taking some financial planning measures early to ensure that you try and get the best from the situation.
First of all, you may receive a redundancy payment. The first £30,000 of this should be paid tax free, as long as it is a true redundancy situation. If your departure from work is not deemed to be a redundancy, such as a severance agreement, then the tax situation may be different. Please check this point before agreeing to leave an employer. Any balance above £30,000 will be taxed at your highest marginal income tax rate. As tax year starts in April, and if we think that it is now October, then we are seven months into a tax year. Therefore, if you add the payment above £30,000 to your earned income so far, you may well find that you will be taxed at 40%, however check this with an accountant or tax adviser because all of our circumstances will be different.
Dependent on your situation, you may want to offset part of the tax on any excess redundancy payment by contributing to a pension. If you have an employer’s scheme, such as an AVC, money purchase or Executive Pension scheme, then you may need to arrange this before you leave service. Therefore, some early planning in the negotiation phase may well be worthwhile. For this financial planning, you should seek Independent Financial Advice (IFA).Although this may be tax efficient, take account of your cash flow situation. Planning for your immediate future is vital.
With the potential of no income coming in for the short term, you are still need to meet the cost of your liabilities and this has to come first. You may want to check any policies that may pay out in the event of redundancy. Some of these plans require you to apply for Benefits and you may plan to arrange this anyway. Also remember that you may be losing other benefits by leaving your employer, such as death in service and ill health/ medical insurance cover. You should check this to ensure that the protection levels you require are maintained.
Others may have reached an age where drawing pension benefits may be an option. Seeking good financial advice at an early stage is important to make sure that this planning is arranged correctly. You may want to use tax free cash and income to replace the income lost from employment. If you are looking at this, then it may well be worth your while checking your state pension benefits, and that of your partner/spouse if you have one, to ensure that you know what these can offer. You can do this by using a BR19 State Pension Forecast form and this can be found here.
Redundancy can be seen as a life junction and possibly an opportunity to reinvent your future employment situation. You may choose to start your own business and, as an aside, Surrey Chambers of Commerce can help you with this. I have detailed my own personal experiences in my book, Sign Here, Here and Here!...Journey of a Financial Adviser.
We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.
Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.
If you find yourself in this position, then it might be worth taking some financial planning measures early to ensure that you try and get the best from the situation.
First of all, you may receive a redundancy payment. The first £30,000 of this should be paid tax free, as long as it is a true redundancy situation. If your departure from work is not deemed to be a redundancy, such as a severance agreement, then the tax situation may be different. Please check this point before agreeing to leave an employer. Any balance above £30,000 will be taxed at your highest marginal income tax rate. As tax year starts in April, and if we think that it is now October, then we are seven months into a tax year. Therefore, if you add the payment above £30,000 to your earned income so far, you may well find that you will be taxed at 40%, however check this with an accountant or tax adviser because all of our circumstances will be different.
Dependent on your situation, you may want to offset part of the tax on any excess redundancy payment by contributing to a pension. If you have an employer’s scheme, such as an AVC, money purchase or Executive Pension scheme, then you may need to arrange this before you leave service. Therefore, some early planning in the negotiation phase may well be worthwhile. For this financial planning, you should seek Independent Financial Advice (IFA).Although this may be tax efficient, take account of your cash flow situation. Planning for your immediate future is vital.
With the potential of no income coming in for the short term, you are still need to meet the cost of your liabilities and this has to come first. You may want to check any policies that may pay out in the event of redundancy. Some of these plans require you to apply for Benefits and you may plan to arrange this anyway. Also remember that you may be losing other benefits by leaving your employer, such as death in service and ill health/ medical insurance cover. You should check this to ensure that the protection levels you require are maintained.
Others may have reached an age where drawing pension benefits may be an option. Seeking good financial advice at an early stage is important to make sure that this planning is arranged correctly. You may want to use tax free cash and income to replace the income lost from employment. If you are looking at this, then it may well be worth your while checking your state pension benefits, and that of your partner/spouse if you have one, to ensure that you know what these can offer. You can do this by using a BR19 State Pension Forecast form and this can be found here.
Redundancy can be seen as a life junction and possibly an opportunity to reinvent your future employment situation. You may choose to start your own business and, as an aside, Surrey Chambers of Commerce can help you with this. I have detailed my own personal experiences in my book, Sign Here, Here and Here!...Journey of a Financial Adviser.
We are all different and therefore, this article should not be seen or used as individual advice. Seek Independent Financial Advice for your circumstances.
Further details of the book and our service are available at our websites, www.signherehereandhere.co.uk or www.churchouse.com
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority. The Financial Services Authority does not regulate taxation advice.
Monday, 20 September 2010
SME’s and all things marketing
In my opinion, marketing is one of the vital components of your business strategy, especially if you are a small to medium size enterprise (SME). Never be embarrassed about the scope and scale of your marketing. Remember that in a new business, no one else is going to do it for you! This is also the case when you enter a partnership with business colleagues.
As we move into an autumn of possible austerity measures being implemented by our coalition Government and the potential of redundancy looming over some employees, planning your strategy for a new start up business is going to be important in the balance of 2010 and into 2011.
Someone within the new business specifically has to own the marketing project and be enthusiastic to promote the ethos of the business. Never assume that someone else is dealing with marketing: get it agreed at the outset who is leading the role and get them (or you) to put together the marketing plan for the next three years. Create a specific 12-month plan as well. I suggest limiting the length of the second plan to 12 months at the outset because your marketing will need to be agile in its approach, taking advantage of opportunities as and when they arrive. Using financial planning and independent financial advice as examples, there could be a change in legislation or an upturn in a particular investment market.
What’s the difference between economies of scale and economies of scope, and why is this important to your marketing strategy?
This was an important learning point for me, especially with regard to marketing. When applying economies of scale to marketing you are sending out a single message in bulk, such as a newsletter. This does work. Because of the volume being used, production of your marketing can be cheap and timely.
But what about taking the same message and rearranging it to re-use parts of your message elsewhere to amplify your message? This is an economy of scope. The same newsletter you wrote to take advantage of economies of scale may feature various newsworthy topics in your profession. You will have spent time checking these topics to ensure that they are relevant, compliant and above all, interesting.
Example of an Economy of Scope
* Create a ‘blogspot’ on your website and segment the topics from your existing newsletter. Then turn them into blogs on your website. You will know that Internet listing sites crave new content.
* Record a five-minute discussion about an interesting and topical subject with a colleague, friend or family member. Then podcast this on your website, or if you are more sophisticated, video it and ‘vodcast’ it. Watch your Internet rankings soar.
* Use social networking sites to discuss the same issue, such as Twitter. However, make sure that it is both relevant and compliant for your regulatory authority, if you have one. (my name on Twitter is ‘onlinefinancial’)
* Convert your regular newsletter into an article, and write to the press about the issues you are considering. Choose an issue that you are well qualified to talk about and are able to answer questions about. This may also have the advantage of demonstrating your commitment to the FSA’s Treating Customers Fairly (TCF) initiative which we endorse.
By doing this, you have taken one newsletter and reinvented it in four other formats, giving the same informed message in very different distribution styles, increasing the potential for audience variation and penetration. With a little extra application, it is possible to diversify your message and distribute it into other areas, creating greater scope for your message to be heard by new prospects.
Once you are recognised as an expert in the topic selected, update your thoughts and understanding and repeat the process.
As an example, many television channels have used the same philosophy, broadcasting their standard channel, then a ‘plus 1’ model, as a new separate channel, just one hour forward. They then add a website distributing the same information. This creates three distribution models for the same message. It’s both innovative and cost effective.
Marketing techniques have changed significantly in recent years and I have found that subtlety over ‘in your face’ promotion works best. Many financial services organisations (other than the banks) lack a shop window and many would not want one. When you have got your marketing right, these prospects will find you easily and sales, either fee based or commission driven will be achieved.
Also, the timing of your marketing is vital. Referring back to your year’s sales target, you have correctly divided your sales target up into months to ensure that you maximise peak performance. Your marketing campaign must coordinate with this sales strategy. If you were running a Christmas shop, you probably would not start your company’s peak marketing campaign in July. The same applies to financial services. You might build your campaign up to March/April/May and then regenerate it again to October/November.
We wish you every success with your new business venture.
Extracts from the new book, Sign Here, Here and Here!…Journey of a Financial Adviser ISBN: 978-0-9564325-0-6
Further details on this topic can be found in the new book available at our website, www.signherehereandhere.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA). This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
As we move into an autumn of possible austerity measures being implemented by our coalition Government and the potential of redundancy looming over some employees, planning your strategy for a new start up business is going to be important in the balance of 2010 and into 2011.
Someone within the new business specifically has to own the marketing project and be enthusiastic to promote the ethos of the business. Never assume that someone else is dealing with marketing: get it agreed at the outset who is leading the role and get them (or you) to put together the marketing plan for the next three years. Create a specific 12-month plan as well. I suggest limiting the length of the second plan to 12 months at the outset because your marketing will need to be agile in its approach, taking advantage of opportunities as and when they arrive. Using financial planning and independent financial advice as examples, there could be a change in legislation or an upturn in a particular investment market.
What’s the difference between economies of scale and economies of scope, and why is this important to your marketing strategy?
This was an important learning point for me, especially with regard to marketing. When applying economies of scale to marketing you are sending out a single message in bulk, such as a newsletter. This does work. Because of the volume being used, production of your marketing can be cheap and timely.
But what about taking the same message and rearranging it to re-use parts of your message elsewhere to amplify your message? This is an economy of scope. The same newsletter you wrote to take advantage of economies of scale may feature various newsworthy topics in your profession. You will have spent time checking these topics to ensure that they are relevant, compliant and above all, interesting.
Example of an Economy of Scope
* Create a ‘blogspot’ on your website and segment the topics from your existing newsletter. Then turn them into blogs on your website. You will know that Internet listing sites crave new content.
* Record a five-minute discussion about an interesting and topical subject with a colleague, friend or family member. Then podcast this on your website, or if you are more sophisticated, video it and ‘vodcast’ it. Watch your Internet rankings soar.
* Use social networking sites to discuss the same issue, such as Twitter. However, make sure that it is both relevant and compliant for your regulatory authority, if you have one. (my name on Twitter is ‘onlinefinancial’)
* Convert your regular newsletter into an article, and write to the press about the issues you are considering. Choose an issue that you are well qualified to talk about and are able to answer questions about. This may also have the advantage of demonstrating your commitment to the FSA’s Treating Customers Fairly (TCF) initiative which we endorse.
By doing this, you have taken one newsletter and reinvented it in four other formats, giving the same informed message in very different distribution styles, increasing the potential for audience variation and penetration. With a little extra application, it is possible to diversify your message and distribute it into other areas, creating greater scope for your message to be heard by new prospects.
Once you are recognised as an expert in the topic selected, update your thoughts and understanding and repeat the process.
As an example, many television channels have used the same philosophy, broadcasting their standard channel, then a ‘plus 1’ model, as a new separate channel, just one hour forward. They then add a website distributing the same information. This creates three distribution models for the same message. It’s both innovative and cost effective.
Marketing techniques have changed significantly in recent years and I have found that subtlety over ‘in your face’ promotion works best. Many financial services organisations (other than the banks) lack a shop window and many would not want one. When you have got your marketing right, these prospects will find you easily and sales, either fee based or commission driven will be achieved.
Also, the timing of your marketing is vital. Referring back to your year’s sales target, you have correctly divided your sales target up into months to ensure that you maximise peak performance. Your marketing campaign must coordinate with this sales strategy. If you were running a Christmas shop, you probably would not start your company’s peak marketing campaign in July. The same applies to financial services. You might build your campaign up to March/April/May and then regenerate it again to October/November.
We wish you every success with your new business venture.
Extracts from the new book, Sign Here, Here and Here!…Journey of a Financial Adviser ISBN: 978-0-9564325-0-6
Further details on this topic can be found in the new book available at our website, www.signherehereandhere.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA). This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
Thursday, 16 September 2010
When to transfer money or assets on divorce?
A capital payment to a spouse may have been agreed in your financial settlement and this will need to be paid at the specified time after the divorce is finalised. This may have been detailed in your Consent Order. This may involve releasing funds from deposit accounts or selling/transferring shares and other assets in order to meet the payment.
It is important that you don’t forget to take a look at the tax implications of this payment requirement as it can have a significant effect on the value that you (or your ex-spouse) finally achieve. For example, you may be required to transfer shares to your ex-spouse upon divorce. Transfers of assets between current spouses do not normally create tax charges — but a transfer to or from a person who is no longer your spouse because you are now divorced may do.
In normal circumstances, assets transferred between civil partners or spouses in the tax year during which they have lived together, including the year of separation, are exempt from Capital Gains Tax (CGT). However, from the end of the tax year of separation the situation changes and if you have large financial assets to be redistributed then you may want to take this into account. You should seek advice on this subject if it affects you, you don’t want to get this wrong, I am sure!
Careful financial planning and timing are important here. Tax positions and legislation can change regularly and the comments above may already have become out of date by the time you might go through a divorce of your own. Check with your accountant or financial adviser before making any changes to make sure that the legislation has not changed.
The tax year runs from the 06th April each year to the 05th April the following year, with most individual annual tax allowances being renewed each year. Each individual is taxed separately, so ensure that you take this into account with your negotiations. Your accountant or independent financial adviser (IFA) should be well placed to make sure you minimise the effects of tax.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
It is important that you don’t forget to take a look at the tax implications of this payment requirement as it can have a significant effect on the value that you (or your ex-spouse) finally achieve. For example, you may be required to transfer shares to your ex-spouse upon divorce. Transfers of assets between current spouses do not normally create tax charges — but a transfer to or from a person who is no longer your spouse because you are now divorced may do.
In normal circumstances, assets transferred between civil partners or spouses in the tax year during which they have lived together, including the year of separation, are exempt from Capital Gains Tax (CGT). However, from the end of the tax year of separation the situation changes and if you have large financial assets to be redistributed then you may want to take this into account. You should seek advice on this subject if it affects you, you don’t want to get this wrong, I am sure!
Careful financial planning and timing are important here. Tax positions and legislation can change regularly and the comments above may already have become out of date by the time you might go through a divorce of your own. Check with your accountant or financial adviser before making any changes to make sure that the legislation has not changed.
The tax year runs from the 06th April each year to the 05th April the following year, with most individual annual tax allowances being renewed each year. Each individual is taxed separately, so ensure that you take this into account with your negotiations. Your accountant or independent financial adviser (IFA) should be well placed to make sure you minimise the effects of tax.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
Wednesday, 15 September 2010
All things pensions in divorce
Pensions can be a complicated subject at the best of times. You probably know that already! When it comes to pensions in divorce, then the situation can get very complicated. Getting good advice at the outset from an individual who is qualified in the subject is usually worthwhile, as you will see.
It may be possible in your case that a pension share may be involved. This may involve both parties getting some property equity, but this equity is effectively traded for a part share of a pension value. If agreement is reached, then a pension share order (or Pension Annex) will be granted by the court and the percentage of the pension that is to be split away is usually transferred out to another pension arrangement of the recipient’s choice, dependent on the scheme. Also note that any agreed transfer out of a pension may incur administration fees by the original provider concerned and I have considered the issue of pensions and their benefits in detail in my book, Addicted to Wedding Cake, The Journey of Divorce.
There was another alternative for pension benefit division introduced in 1995 Pensions Act called Earmarking. This has not been widely used because it may not achieve a ‘clean break’ in pension terms and does not allow the ex-spouse to receive a pension income until the originating spouse with the pension fund actually draws benefits and retires. Death and remarriage will also effect this option. Some pension providers, usually final salary schemes, allow the share to stay within the scheme, although this is not always the case. If this is achievable then it should be considered carefully along with any other options. Remember that some pensions can give benefits in different ways and you may come across Personal Pensions (PPP), Section 32’s, Retirement Annuities (RA’s), Guaranteed Annuities and Executive Pension Plans. Quite a maze and don’t forget your State Pension Benefits. You should speak to a qualified Independent Financial Adviser (IFA) about the options available, but I recommend that you search hard for an adviser who knows the subject well as it is a specialist area.
Whatever you do, get independent financial advice on the real monetary values of what you and your partner hold in pensions, as an example. This is partly because you do not want to give away too much by transferring a Cash Equivalent Transfer Value (or CETV for short) to an ex-spouse.
The independent financial adviser (IFA) can be instructed by you individually or, with agreement, both parties to get an overall view of the financial situation to demonstrate true values of pensions and there benefits. Some IFAs are affiliated and accredited by the organisation Resolution and it might be worth your while enquiring about this accreditation from your financial adviser as their numbers have been growing across the UK. They have received training and testing as a ‘Financial Neutral’ in helping a separating couple with the pensions and financial affairs in divorce situations.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
It may be possible in your case that a pension share may be involved. This may involve both parties getting some property equity, but this equity is effectively traded for a part share of a pension value. If agreement is reached, then a pension share order (or Pension Annex) will be granted by the court and the percentage of the pension that is to be split away is usually transferred out to another pension arrangement of the recipient’s choice, dependent on the scheme. Also note that any agreed transfer out of a pension may incur administration fees by the original provider concerned and I have considered the issue of pensions and their benefits in detail in my book, Addicted to Wedding Cake, The Journey of Divorce.
There was another alternative for pension benefit division introduced in 1995 Pensions Act called Earmarking. This has not been widely used because it may not achieve a ‘clean break’ in pension terms and does not allow the ex-spouse to receive a pension income until the originating spouse with the pension fund actually draws benefits and retires. Death and remarriage will also effect this option. Some pension providers, usually final salary schemes, allow the share to stay within the scheme, although this is not always the case. If this is achievable then it should be considered carefully along with any other options. Remember that some pensions can give benefits in different ways and you may come across Personal Pensions (PPP), Section 32’s, Retirement Annuities (RA’s), Guaranteed Annuities and Executive Pension Plans. Quite a maze and don’t forget your State Pension Benefits. You should speak to a qualified Independent Financial Adviser (IFA) about the options available, but I recommend that you search hard for an adviser who knows the subject well as it is a specialist area.
Whatever you do, get independent financial advice on the real monetary values of what you and your partner hold in pensions, as an example. This is partly because you do not want to give away too much by transferring a Cash Equivalent Transfer Value (or CETV for short) to an ex-spouse.
The independent financial adviser (IFA) can be instructed by you individually or, with agreement, both parties to get an overall view of the financial situation to demonstrate true values of pensions and there benefits. Some IFAs are affiliated and accredited by the organisation Resolution and it might be worth your while enquiring about this accreditation from your financial adviser as their numbers have been growing across the UK. They have received training and testing as a ‘Financial Neutral’ in helping a separating couple with the pensions and financial affairs in divorce situations.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director of Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority
Tuesday, 14 September 2010
Protecting Divorce Maintenance Payments
Even if you are divorced (or going through the process), protecting the family in the event of your death should still be a priority. If you think about it, if you were still married you would want to know that your family was protected if you died. Just because you no longer love your ex-spouse does not mean that you would still want to protect your children. At least they still love you!
One possible way of thinking about this is the amount of maintenance you pay and capitalising this amount to give the total amount needed to ensure that they still get their money if you die.
And talking of the maintenance you pay, if you think about what you have agreed to in your financial settlement and you are paying both spousal maintenance and also child maintenance, this might be agreed as separate amounts. This might be specified in your Consent Order. You may want to set up two payments from your bank account so that each payment can be evidenced, rather than merging both payments into one (even if they are being paid to the same bank account) such as your ex-spouse’s. Although this might be a bit of extra hassle, it may make things clearer if there is a dispute at a later date and payments records are required or if maintenance payments are to be adjusted.
Protecting your payments
Maintenance is usually paid by standing order from the payer’s bank account, but in certain circumstances it can be capitalised as a single payment to the recipient in advance so that he or she is not reliant on the payment each month. This may give the holder of the maintenance some additional security and, from another point of view, some maintenance payers prefer it this way because it keeps contact to a minimum.
For those who have agreed to pay a regular maintenance payment, they may also be required to take out life assurance cover to protect the maintenance payments if they should die in the early years, leaving a family without income. In certain circumstances one ex-spouse takes out life cover on the other. The insured ex-spouse will have to co-operate as medical underwriting may be required and he or she will need to sign the life assurance application forms and fill in the medical questions required. If the spouse is taking the policy out on the life of the ex-spouse then he or she is insuring ‘The life of another’. If the cover levels you require are high, then the medical underwriting may take a little time so make sure that you start the process with time to spare. Most Life Assurance applications can be resolved and completed in around six to eight weeks.
The maintenance receiver pays the premiums for the life cover. This gives the person who receives the maintenance the protection of knowing that the life cover will remain in place and that the premiums required will not stop when no one is looking (or placed in Trust to someone else) because the proceeds will always be paid to the policy owner.
Speak to your financial adviser about the cost of this protection before requesting this as part of your settlement in case the premiums required for the cover are prohibitive. They may also be able to use an existing protection policy, if available and appropriate.
To expand on all things divorce and the fundamentals, I have been able to outline the full process in my new book, Addicted to Wedding Cake, The Journey of Divorce.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director, Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority
One possible way of thinking about this is the amount of maintenance you pay and capitalising this amount to give the total amount needed to ensure that they still get their money if you die.
And talking of the maintenance you pay, if you think about what you have agreed to in your financial settlement and you are paying both spousal maintenance and also child maintenance, this might be agreed as separate amounts. This might be specified in your Consent Order. You may want to set up two payments from your bank account so that each payment can be evidenced, rather than merging both payments into one (even if they are being paid to the same bank account) such as your ex-spouse’s. Although this might be a bit of extra hassle, it may make things clearer if there is a dispute at a later date and payments records are required or if maintenance payments are to be adjusted.
Protecting your payments
Maintenance is usually paid by standing order from the payer’s bank account, but in certain circumstances it can be capitalised as a single payment to the recipient in advance so that he or she is not reliant on the payment each month. This may give the holder of the maintenance some additional security and, from another point of view, some maintenance payers prefer it this way because it keeps contact to a minimum.
For those who have agreed to pay a regular maintenance payment, they may also be required to take out life assurance cover to protect the maintenance payments if they should die in the early years, leaving a family without income. In certain circumstances one ex-spouse takes out life cover on the other. The insured ex-spouse will have to co-operate as medical underwriting may be required and he or she will need to sign the life assurance application forms and fill in the medical questions required. If the spouse is taking the policy out on the life of the ex-spouse then he or she is insuring ‘The life of another’. If the cover levels you require are high, then the medical underwriting may take a little time so make sure that you start the process with time to spare. Most Life Assurance applications can be resolved and completed in around six to eight weeks.
The maintenance receiver pays the premiums for the life cover. This gives the person who receives the maintenance the protection of knowing that the life cover will remain in place and that the premiums required will not stop when no one is looking (or placed in Trust to someone else) because the proceeds will always be paid to the policy owner.
Speak to your financial adviser about the cost of this protection before requesting this as part of your settlement in case the premiums required for the cover are prohibitive. They may also be able to use an existing protection policy, if available and appropriate.
To expand on all things divorce and the fundamentals, I have been able to outline the full process in my new book, Addicted to Wedding Cake, The Journey of Divorce.
Further details of this new book are available at our websites, www.addictedtoweddingcake.co.uk or on Amazon here.
Speak to Churchouse Financial Planning Limited (or your independent financial adviser/ IFA) to help with advice on this issue. This statement is not individual advice and should not be relied on because each clients circumstances are different.
Keith Churchouse
Director, Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority
Friday, 3 September 2010
Autumn 2010 Pension Planning and Changes
With the new coalition government in place, many changes have been proposed for pension planning. I have listed two examples of these below.
State Pension age for men increasing to 66 from 65 in 2016
The State pension age for men is to increase to 66 from 65 in 2016. This is another change that may see a refocus in your pension planning strategy and would recommend that all clients check their state pension benefits if they have not done before. If you would like further guidance on achieving a forecast then please let us know.
Pension Contributions
Some clients trying to make larger pension contributions to enjoy the relevant tax advantages in recent times have had to consider new restrictions applied by HM Revenue and Customs to restrict the level available. These restrictions are now under review and we may see changes to these rules by April 2011. Clearly this is a changing situation and if this situation affects you then please let me know and we can start planning as new information and regulation becomes clearer.
If you plan to review your pension planning in light of these proposals and changes then seek Independent Financial Advice (IFA). This is not designed to provide individual advice. Churchouse Financial Planning Limited is a Chartered Financial Planner and Independent Financial Adviser based in Surrey. They can be contacted on 01483 578800.
Keith Churchouse
Director, Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority
State Pension age for men increasing to 66 from 65 in 2016
The State pension age for men is to increase to 66 from 65 in 2016. This is another change that may see a refocus in your pension planning strategy and would recommend that all clients check their state pension benefits if they have not done before. If you would like further guidance on achieving a forecast then please let us know.
Pension Contributions
Some clients trying to make larger pension contributions to enjoy the relevant tax advantages in recent times have had to consider new restrictions applied by HM Revenue and Customs to restrict the level available. These restrictions are now under review and we may see changes to these rules by April 2011. Clearly this is a changing situation and if this situation affects you then please let me know and we can start planning as new information and regulation becomes clearer.
If you plan to review your pension planning in light of these proposals and changes then seek Independent Financial Advice (IFA). This is not designed to provide individual advice. Churchouse Financial Planning Limited is a Chartered Financial Planner and Independent Financial Adviser based in Surrey. They can be contacted on 01483 578800.
Keith Churchouse
Director, Churchouse Financial Planning Limited
Churchouse Financial Planning Limited is Authorised and Regulated by the Financial Services Authority
Subscribe to:
Posts (Atom)
Posts
