cottage on money_Images_ Of_MoneyIf you and your spouse have decided to split the joint assets it’s very easy to think that how you achieve that split will not affect the outcome. Will it make a difference if you remain in the house and don’t take any other assets compared to if you downsize now and take a share of other assets?

At first glance it cam seem that the 2 options are exactly the same provided in each case you end up with your appropriate share. But in fact this is not the case.

In the resources section there is an example divorce scenario of Sally and Simon Smith to highlight that how you split the assets does in fact make a real difference.

In scenario 1 the assets are split 50:50 and Mrs Smith is awarded the family home. She retains her own pension and investment holdings but does not have a share of any other assets.  Under this scenario and based on the assumptions made she runs out of money at age 74.

In scenario 2 Mrs Smith is again awarded a 50:50 split of the assets but chooses to downsize at the time of the divorce. She retains her own pension and investment holdings but also receive a share of Mr Smith’s pension.  Under this scenario she runs out of money at age 83.

The example has been based on a made up set of figures because if Mrs Smith were to run out of money at age 83 some additional financial planning is required to ensure her funds can last longer.

However, what this example highlights is how important it is to look at how long your funds will last, even once you have agreed a split. Being awarded full value of the family home will not necessarily give you the same outcome as downsizing and being awarded further cash or pension share.

The details of the case study and the workings are shown here.

If you are going through a divorce and need help with your financial negotiations please call me on 01932 698150 for a confidential chat.

photo credit: Flickr/images-of-money