Ask an expert: “After 25 years of marriage, I am getting divorced. How big a divorce settlement do I need – and how should I invest it?”

Background

We started working with our client, Michelle*, during her divorce. She had been married for 25 years and, after a career as a management consultant, had more recently been the homemaker to her husband and three children (aged between 9 and 15 when divorce proceedings began). Her husband was a senior executive in a global banking group. 

This was a highly stressful time for Michelle. She and her soon-to-be-ex husband were hoping to avoid going to court, but had not yet agreed on the children’s future living arrangements. Michelle anticipated being their primary caregiver. The couple’s lawyers were also in the early stages of negotiating a financial settlement.

We were introduced to Michelle by her lawyer, who recommended that she speak to an experienced wealth manager to develop a plan for her financial future. Michelle had recently completed her “Form E,” which detailed her and the children’s regular expenditure and she had a good grasp of her outgoings.

The team at Cazenove Capital frequently advises clients going through divorce. We work closely with clients, their lawyers and accountants to explore planning opportunities and longer-term objectives before a divorce is finalised.

Key needs

Life as Michelle and her children knew it had been turned completely upside down. However, the divorce had not come as a surprise and Michelle was looking forward to starting the next chapter of her life. She knew that gaining knowledge and understanding of her finances was a vital first step.

Michelle was using this time to reflect upon what was really important to her, how she wanted to live her life and whether she wanted to return to work. She wanted to ensure that she and the children would be adequately provided for and she wanted our thoughts on what financial settlement would enable this. She also understood that the settlement proceeds would need to be invested for the long term and that this would require the expertise of an investment professional. 

How we helped

•    We had a series of meetings with Michelle to help her understand her near-term requirements and longer-term objectives. This empowered Michelle during the financial negotiations of the divorce proceedings, helping her to take control of her financial future.

•    It had been agreed that Michelle would keep the family home so her key objective was to ensure that she and the children could maintain their existing lifestyle. She also wanted to increase her retirement savings. We used cashflow forecasting models to help frame conversations around expenditure, risk strategy and capacity for loss. We shared the results of our cashflow modelling with Michelle’s lawyer, who used them in the negotiations.

•    We built a plan for Michelle in anticipation of the divorce settlement. This included making use of tax-efficient allowances (ISA, Capital Gains Tax and pension) to maximise investment returns. We also helped Michelle rationalise her assets and structure them in a way which was straightforward and simple to manage moving forwards.

Cazenove Capital’s advice played an important role in helping Michelle secure a divorce settlement that worked for her and her children. She felt empowered by having a better understanding and greater oversight of her finances. She also took comfort from knowing that her portfolios were being managed in line with her long-term objectives, allowing her to focus on her children, her career and her new life. 

*Client names have been changed to protect confidentiality.