Separating your finances on divorce

Separating your finances on divorce - by Tamsin Caine

Financial Planner and podcast host Tamsin Caine is interviewed by her colleague and fellow Financial Planner Steven Martin. He asks how financial planning can help those who are going through separation and divorce, why Smart Divorce was created and about Tamsin’s passion for helping couples, especially parents, to part amicably.

Director of Financial Planning and Chartered Financial Planner Tamsin Caine has a strong background of over 15 years within the financial services profession. She began Smart Divorce following her own experience with divorce; she now advises people in the same situation as she once was, enabling them to take back control of their life and finances. Smart Divorce website is www.smartdivorce.co.uk. Contact her by email tamsin@smartdivorce.co.uk.

Steve, along with wife Michelle, established Smart Financial in October 2008. He has nearly 20 years’ experience in the profession, having been a Partner and Managing Director at previous firms and is a Chartered and Certified Financial Planner (CFP), a holder of the Investment Management Certificate and a former Assessor of the CFP licence.

Steve was an active member of the Manchester branch of the IFP before its amalgamation with the CISI, holding the position of Chair from 2009 until 2014. He also used to sit on the Financial and Legal Sector Panel. He speaks regularly at Financial Planning meetings around the country and is also a regular contributor to a wide range of feature articles on financial and money management related subjects across trade, local and national press.

Steve also leads Financial Planning Training Academy, a specialist training business set up to train financial advisers to become accomplished Financial Planners.

Steve is married to Michelle and they have two boys, he is a keen runner and crossfitter, an Ironman triathlete and is a committed fund raiser for the Cystic Fibrosis trust and other related charities. He has recently competed in the CF Warrior Games where his team raised over £14,000 for the CF Warrior charity.

Steve’s next target is to run a sub-3 hour marathon which he hopes to achieve in December 2019.

As the needs of the business’ clients changed, Steve established Smart Trustee Services Limited (Smart SSAS) in 2011.

Transcript

Hello and welcome to the Smart Divorce podcast. This podcast is for you if you’re thinking of separating, already separated or going through divorce. 

My name is Tamsin Caine  and I’m a chartered financial planner. We’ll speak to some fantastic specialists who can help you to get through your divorce,  hopefully amicably and start your new chapter positively. Now over to today’s guest.

Hi and welcome to this Smart Divorce podcast! Something a little bit different this morning. I’m going to get interviewed myself by my colleague Steve Martin. Thank you for agreeing to this Steve!

Steve My pleasure.

Tamsin So I’m gonna hand over to Steve and let him ask the questions.

Steve Thanks Tamsin! Morning to everybody and thank you very much for having me! As you are the interviewee, Tamsin, it seems only fair for you to start by explaining a little bit about who you are and what you do and why you do it.

Tamsin  Okay. So I’m Tamsin Caine. I’m a chartered financial planner. I’ve been working in financial services, but I reckon it’s 20 years this year, which is terrifying. And I work for Smart Divorce that is aimed at helping couples and individuals to work out their finances so that they can separate and divorce amicably, which I believe is most beneficial for the future of both of them and any children that are involved in the marriage.

Steve Sure. And that that makes sense, doesn’t it? I mean for people that don’t really know the subject, it would also be a bit like “Oh, yeah, obviously?” Is that not normally what happens?

Tamsin No, no, not all. The traditional route to settling divorces is or has been in the past, and it is, I’m glad to say, becoming less and less… But the traditional route is that each member of the couple goes to see a lawyer and they fight a bit, usually by letter and then they end up in court proceedings fighting some more with a judge who says: “Right enough. This is what I think you should do. This is what you get. This is what you get.” And that’s the end of that. The problem if you’ve been fighting in court for quite some time and fighting by letter or email or three lawyers, is that it’s then very difficult to have a conversation with your ex-spouse about what happens with your children. About if they want to stay with the other person for an extra night. If they’re having difficulties at school that you need to resolve between you and those things still continue, even if you’re living in different houses and you are divorced. And for the sake of the children it’s much better if all of this stuff is sorted amicably so that you guys can get on with each other in the future and move forward in a more friendly way.

Steve Yeah, I mean again, that just all seems really sensible. Why, why hasn’t it worked like that in the past? How did it end up like it is just now?

Tamsin So one of the things that.. that I believe is partly responsible is the way in which divorce works at the moment and this is currently going through parliament, so it’s it’s quite relevant. But there is.. there is a move at the moment called “No fault divorce,” which is trying to put an end to the blame game, which exists in the current application for divorce. So at the moment you have five what are called facts, that you need to you need to use to divorce another person, so they are: unreasonable behaviour; adultery and desertion. And those three can be used at any time. Or, if you’ve been separated for two years and you both agree you can divorce without blame or five years if one party doesn’t agree. So if we go back to the first, particularly the first to the unreasonable behaviour or the adultery, one party has to blame the other person. They have to detail in black and white on a form what exactly the person has done. So even if you begin the process by being quite friendly and saying what we want is an amicable solution, when the other person sees in black and white what you’re accusing them of, it quite often moves to a battle or a fight situation or “Hang on. I didn’t do that.” It brings up a lot of emotional responses that weren’t there before and making something that could have been sorted out amicably into a big fight. Then the party might think “Well, if that’s what you think of me, I’m gonna take you for every penny you’ve got” and the other way around. Reality of that though is that every penny they’ve got is every penny you’ve got because there is one part of money which is all of your marital assets, particularly in long divorce situations.

Steve Yes. So in the end, it cost everybody.. everybody loses out of that situation. Where by two sides trying to win, both sides lose.

Tamsin Yeah, absolutely.  There is one, there’s only one pot of money. There is no divorce fairy who comes and pays for your legal fees and your barrister, injunction and so on. You know, all these things the money has to come from somewhere and it’s not external. It comes from the money that you have. So if you spend tens of thousands of pounds on court fees, it’s coming out of money that could have come to you if you’d have settled out of court in a more sensible, amicable way.

Steve So there’s both a significant financial down side to this as well as the relationship and emotional side that you touched on earlier.

Tamsin Yeah, absolutely.

Steve Okay, so I mean, it feels a bit like a leading question because I think we probably covered most of the ground. But just cover off for a specifically why you established Smart Divorce?

Tamsin Yeah, so I’m divorced myself. We managed to come to an agreement by ourselves. We have a relatively amicable settlement. We have reasonably friendly situation between the two of us. We talk about issues with the children. We’re able to change arrangements for whether they’re with me or whether they’re with their dad at relatively short notice, and we both try and accommodate one another. And the result of that has been that the children have come through our separation and divorce relatively unscathed. I do say relatively unscathed because I think there are always.. There are always going to be some difficulties, but actually they’re reasonably well adjusted as a result of it. And I felt that the work that I do as a financial planner could benefit other people going through what I’ve been through. And I was in the beneficial position of understanding how our finances worked and how they could be separated for the benefit of both or us. But not everybody’s in that position and I’m really, really keen to help more people to be able to settle everything amicably and to not have to go through these horrible court proceedings and to not have to spend huge amounts of money that really aren’t necessary if you sit down and try and take some of the emotion out of it, which is easier said than done.

Steve Yeah, of course. So where does Smart Divorce fit into the process, then? I mean, obviously, you said earlier there there’s a form that needs to be filled in, and as it stands and some attribution of blame from one side to the other. Presumably people still need a lawyer at some point. How does that all work, and where does Smart Divorce fit in that process?

Tamsin Okay, So traditionally, financial planners have been involved in the process very, very late on. So once, for example, an agreement has been made to split a pension. So, for example, one of the spouses is entitled to half of the pension from the other spouse in the agreement that they’ve come to. Then a financial planner, would usually get involved at that stage, they would, which is right at the end of the divorce.  In terms of Smart Divorce, we like to be involved right at the beginning. So we are seeing more and more clients before they’ve even got legal representation. What you find when people separate is that their biggest concerns are about how I’m gonna survive financially, where are we gonna live? How can I manage on the income that I’ve got? What my entitled to financially? What will my ex have to pay me? Or what will I have to pay my ex? The other thing is about the children and where they live in and how they get sorted out. But once you sort out the finances, the children’s side of things does become more straightforward. So, by seeing us right at the beginning, maybe even before you’ve seen a lawyer or a mediator and so on, we can help you to look at what assets you’ve got in your marriage, what income you’ve got in your marriage and how you can fairly divide them up so that you can see how you can both move forward with your future life, without having to come to blows over who gets what.

Steve And that’s a relatively new approach to dealing with an impending divorce, isn’t it?

Tamsin Yeah. There are very few financial planners that I’m aware of that work in that way, and it’s very new in terms of the legal profession. So we worked with some family lawyers, mediators who also believe that this is the right approach that actually getting the financial planning side of things sorted out right up front, is actually a better step than waiting to get someone involved at the end. And we can help people to get that peace of mind and that clarity on where their finances lie before they start the legal process. Which means, actually, that some of the emotion about how are we going to live from, what we’re going to live on, and are we going to be on beans on toast for the rest of our lives. Some of that is set aside before you even start the legal work, which makes that a lot more straightforward.

Steve And presumably, Smart Divorce’s service isn’t free. So does this make the whole process more expensive?

Tamsin No, obviously service, of course, isn’t free. We work in an hourly rate in general, for clients that we we do this type of work for. We tend to find that it doesn’t make things more expensive because the clarity about their finances is dealt with some sort of idea of settlement is agreed between the parties before they start seeking legal representation. Actually, it reduces the cost of the whole process because things are sorted out much more quickly and much more straight forward. And you’re avoiding the barristers’ costs on the court costs, etc for actually taking the whole decision in front of the judge, which kind of cost tens of thousands pounds. I’m we’re not looking at that by any means.

Steve Okay. So if people want to operate in this way, in an ideal world, do the Smart Divorce act on behalf of one person, or does it act on behalf of the couples? The couple as appearing? How does that work?

Tamsin I would say, in an absolutely ideal world, it works best in couples. So we can work with the couple from day one to help them look at their finances as a whole, and to work out what a fair division will be. However, couples aren’t always in a place where they want to do that. There’s usually.. one person has taken the decision to end the marriage, it is very rare that it’s a joint decision to end the marriage, and it might be the one individual prefers to seek this advice confidentially from the other spouse in the early days and it may be that they’ll change their minds and say, “Well, actually, I think it would be better first to come as a couple.” But what we can help either an individual or couples.

Steve Okay. But in an ideal world if people are in a relatively healthy communicating state with an aspiration to separate as easily as possible. Unlike with a lawyer, it would be preferable to come together and and go through the process as one. As supposed to go off and find their own financial planners to look at the situation.

Tamsin Yeah, absolutely, makes makes more sense. And to see us as a couple, because then you’re looking at.. you can see why, why a fair split looks like a fair split. So we have some fantastic professional software that we use that enables us to show you graphically, the fairness and equality of how we’re splitting, how we are suggesting that the assets are split. And fairness doesn’t always mean splitting things 50/50. Fairness could be a tilt towards one party because the other one, for example, earns a lot of money and is in a position that they can rebuild their assets quite quickly. So it’s about fairness and that’s that’s how judges rule as well. It’s about fairness of the division of the assets. So if if both parties can see what’s there, I think, especially if they’re in a position where they’re communicating well, they’re more likely to be able to come to an agreement more quickly.

Steve Yeah. I mean, that obviously makes makes sense, and presumably they’re also going to get a sense of not only fairness, but what it actually means for them and their future lives?

Tamsin Yeah, absolutely. Divorce is the end of one chapter and the start of another. One of the things that we talked about is, have a think about what you want your future life to look like. Does it look like it does today? Or, have you been holding back on doing something that you’ve you’ve always wanted to do, and now you don’t have to answer to somebody else. That sounds a bit harsh, but you know you don’t have to consider another spouse’s requirements or desires themselves. You can free your mind up a lot to think about what you want your future life to look like.

Steve And obviously, having a rough understanding of what the financial resources may be available to you, to start to address that or work towards that?

Tamsin Yeah, absolutely. And sometimes it’s not things that they want to do that will be having negative financial impact. Sometimes it might be a positive financial impact. It might be “Well, I’ve always wanted to go back to work, but I haven’t been able to because you didn’t want me to.” You know, that’s not that uncommon. Although, it sounds a bit 1950s, there are situations where that happens.

Steve Sure, so somebody wants to come either individually or as a couple to see you. What should they expect? What does the process of working with a financial planner at the kind of the point of separation look like and feel like?

Tamsin Okay, so we invite you to come into our offices, and the reason that we do that is because it’s, you are not in the family home, you’re in somewhere that’s separate to where everything has happened in the past. It’s neutral ground. Our lovely colleague Charlotte will make you a fabulous drink. We’ll sit down and have a conversation, and I’ll ask a lot of questions about where you are up to, about what you would like in an ideal situation, how you anticipate things will look and then we’ll find out some broad brush ideas about where you are at financially at the moment, what your marital assets broadly look like, say that we can get an understanding as to what might be involved and the complexity of separating those assets out between you.

Steve Okay, and that all happens in one session, does it?

Tamsin So that part all happens in one session. And then we can talk about how we can help you to move forward. The next step will be to get much more detailed factual information, which is usually gathered by my colleague. She would take down exactly what your pension is, where it is, what it’s worth and what the house is worth, how much mortgage is, all that exciting stuff. I let her do that because to me the interesting bit is the talking to the clients and finding out about them and what they want from their future and where they are at and how we can help them, because we’ve got all that factual information. Then we build.. we use our financial software to build a plan, and we have a look how you look as a couple, financially and then how you might look as individuals. And we start to look at how the financial assets that you’ve got might be split between you so that we can achieve some sort of agreement. We then begin with the couple and go through those plans with them and make any adjustments that they suggest making and see what the impact of that might be, hopefully to come to an agreement about how they move forward with their finances. And at that point, if they’ve not got legal representation already, then we can introduce them to a lawyer or a mediator as might be suitable.

Steve Okay, so the outcome is that they have, in essence, with your help or other financial planners help – it can effectively go to the solicitors and say, at least from the financial point of view, this is what we want to do. Is that how it works?

Tamsin Yeah, absolutely. You do need a legal professional to draft the financial consent order, which gets rubber stamped by the court. Whilst it’s not completely essential, I would certainly recommend it because it means that the court have said this is the agreement that you’ve come to and it means that there is less likelihood of combat later for minor party because it’s been, that’s what you’re doing. That’s what’s been agreed and is being rubber stamped by a court.

Steve Sure and would the childcare arrangements tend to be picked up in the financial planner discussions, or would they tend to transfer on to.. would these tend to be dealt with once the lawyers become involved? Assuming that there are children, of course.

Tamsin Yeah, we do try to get our clients to discuss between themselves the childcare arrangements that might work best for them. We try to get them to talk about what they both want in an ideal world, and what’s practical. Now in an ideal world I guess everybody would have a 50/50 split between the children being with one parent and the other. But in reality, if one of them works away most of the week or is required to be out of the house very early in the morning, and back late at night and you have young children, that’s not really practical. So it needs to be a practical arrangement. So we do try to help clients to discuss it as part of our discussions. But if they haven’t come to a resolution by the time we’ve sorted the finances out, then we would pass that on to the legal professionals to help him to finally agree.

Steve And if you find that people are then maybe in quite entrenched positions or are struggling to communicate effectively with each other, are there other professionals that could be called upon to come into the process to help move it forward?

Tamsin Yeah, absolutely. We work with a couple of divorce coaches as well as counsellors, also a hypnotherapist who has podcasted with us. And they can help more on the emotional side. It is sometimes the case that people just aren’t ready. Now, we we saw somebody just before Christmas who was in a position where they thought they wanted to separate, they wanted to look at the financial implications. Actually, emotionally, they’re just not ready to take these first few steps in starting to sort things out. So it is important to give people time and make sure that they’ve got the support from properly trained and qualified people to deal with the emotional side of divorce. Because essentially, it’s a grief process. You know, they’re going through the grieving of the loss of your marriage. On whether you felt that it was time that ended or not, it’s really important that you get that support.

Steve Sure, so although you’re very much encouraging people to engage with the financial planner as early as possible, there could be a kind of dispersion I suppose from that, depending on the individual needs of people, whether they be from emotional or  legal or whatever. It’s not just the case of you come to financial planner and you’re closed off from anybody else and you know you gonna pop out the other end divorced. It’s kind of a collaborative approach, yeah?

Tamsin Yeah, absolutely. It’s certainly not a case that you come to us and we do everything and you leave and it’s all boxes ticked. Divorce is one of the hardest things that most people will ever go through in their lives. And it’s.. I know people use the term roller coaster a lot, but it really is a roller coaster. And even if you’re trying to sort things out amicably, and even if you get on relatively well with the person that you’re separating from, it’s difficult and it’s hard work. And there will be times where you’re fighting or arguing or not being able to come to a resolution, however much you both wanted because you both think you’re right about a certain sticking point. And sometimes we need other people to come in and help and support that process.

Steve Okay, fantastic. So, as for working alongside the legal profession, we touched on this a little bit. But how would you kind of define the parts of the process that the financial planner fulfils versus what the legal profession would do both in the way that you operate and you know, potentially in the way that people have operated in the past.

Tamsin So we work with both both family lawyers and mediators and we have recommended clients to go and see both legal professionals are mediators, and sometimes process needs you to see a lawyer because their experiences in what a judge might say as a result of your situation, there are some aspects of divorce situations that we can’t, we can’t necessarily not not-help-with but needs legal input. Needs the experience and advice of a lawyer or a mediator. Traditionally, people go and see a lawyer or a mediator right at the beginning and then as I say they would normally bring financial planners in much later if at all. It tends to be that we’ve been brought in by legal professionals that we work with much, much earlier on in the process to help clients, to either educate them financially because quite often in the couple you have one of the parties who is much less financially educated than the other. And I don’t mean that disrespectfully at all. But usually you have one person who does the money and pays the bills, and the other person will do a different job and have a different responsibility within the marriage. So it might be that one party’s never paid a bill in the life and doesn’t know what those things cost and so on. So some of what we do is providing support for people and helping to educate them so that they can go through mediation together on a more even footing. So that’s one way that we’re  working with legal professionals as well as helping to provide that peace mind, helping to show the faire split. We can also if you’ve been involved with lawyers at the beginning and you each have legal representation, you might have an offer of a settlement from the other person, but you might not actually understand what that is. So if you were offered, let’s say, £20,000 a year for five years and £500,000 pension settlement. If you don’t know really what your bills cost and your lifestyle costs, it’s very difficult to understand what that might mean to you in terms of your future life, so we can help to give you clarity about that and whether you.. it makes sense for you to accept that offer or actually whether you should go back and tweak it a bit, hopefully to come to an agreement much more quickly.

Steve Okay, so it’s working hand in hand with the legal profession counsellors, mediators rather than – there’s no conflict or competition between the various professional services.

Tamsin No, not at all. And I think most most legal professionals working in divorce, certainly the ones that we work with, they want to help people to divorce amicably and to get a resolution in as fair a away as possible, and they don’t have a huge desire to go to court and battle it out.

Steve Fantastic! So if people want to get in touch with you, presumably on the basis that they are listening to the podcast that you routinely host, they would know how to do so. But just for clarification, can you just confirm the easiest or preferable way for people to get in touch?

Tamsin Yeah, absolutely. My contact details are in the show notes from today and you can get hold of me on our website which is smartdivorce.co.uk. You can contact me through Twitter, through LinkedIn, through Facebook or by email or telephone you can get the details as I say in the show notes.

Steve So you’re almost omnipresent. We can get you anywhere. As all good podcasters of course would do: Is there anything I should have asked you that I haven’t asked?

Tamsin I don’t think so. I think we’ve covered everything.

Steve Perfect. Thank you very much for giving me the chance to interview you on your podcast. I have thoroughly enjoyed it! I hope I’ve done a reasonable enough job.

Tamsin That’s brilliant! Thanks ever so much for doing that for me Steve, that was great!

Tamsin

Thank you for listening to the Smart Divorce podcast. If you’d like details of our guest today or of myself so you can get in touch, please check out the programme notes! Many thanks, see you again soon!