Morfitt's Mailshot Issue 39...          Can't see this email properly? View in browser

Morfitt & Turnbull

Issue 39   

From one extreme to another!

After the most romantic day of the year has been and gone again we thought that we’d completely change the mood and take a light hearted look at divorce and the costs that it can involve.
Some 42 per cent of marriages in England and Wales end in divorce, according to the Office for National Statistics, most commonly in the first 10 years, with the peak age for divorce being the late 40s for men and early 40s for women.

There is an increasing trend in older couples divorcing, with the over 60s making up 9 per cent of the 107,071 divorces which took place in 2016, a rise of 4.3 per cent on the previous year.

The most expensive divorces have been:
  Game over
Alec Wildenstein's divorce in 1999 from Jocelyn Wildenstein; estimated at $3.8 billion, is the most expensive divorce settlement on record, below are a selection of other settlements involving various celebrities, pop stars and sportspeople etc.
  • Bernie Ecclestone's divorce in 2009 after 23 years of marriage from Slavica; estimated at $1.2 billion.
  • Steve Wynn's divorce in 2010 from Elaine; estimated at $1 billion.
  • Mel Gibson's divorce in 2006 after 26 years from Robyn Moore Gibson; estimated at $425 million.
  • Roman Abramovich's divorce from Irina Abramovich; estimated at $300 million.
  • Michael Jordan's divorce from Juanita Jordan, $168 million.
  • Neil Diamond's divorce from Marcia Murphey; estimated at $150 million.
  • Harrison Ford's divorce from Melissa Mathison; estimated at $118 million.
  • Greg Norman's divorce from Laura Andrassy; estimated at $103 million.
  • Steven Spielberg's divorce from Amy Irving; estimated at $100 million.
  • Madonna's divorce from Guy Ritchie; estimated at $76–$92 million.
  • Tiger Woods' divorce from Elin Nordegren; estimated at $100 million.
  • Kevin Costner's divorce from Cindy Silva; estimated at $80 million. 
  • Paul McCartney's divorce from Heather Mills; estimated at $48.6 million.
  Madonna & Guy Ritchie
  • Michael Douglas' divorce from Diandra Douglas; estimated at $45 million.
  • Donald Trump's divorce from Ivana Trump; estimated at $25 million.
  • Mick Jagger's divorce from Jerry Hall; estimated between $15 and $25 million.
We could have listed far more cases, but I think that’s enough to give you all a flavour of this topic!!

Hope you all have an enjoyable Easter break next month, Craig

Adam's Technical... 
When going through a divorce we inevitably have to deal with the financial side of sharing assets. Below I have listed some points to bear in mind in no particular order (mainly revolving around pensions!):
  There are three ways to deal with pension funds on divorce, as follows:

Offsetting - whereby the value of the pension fund(s) can be offset against other assets so the entire pension stays in the holder’s name.

Earmarking - this is when part of the pension gets paid to the ex-spouse once benefits are taken. This has become less common in recent years due to the inflexibility and the introduction of pension sharing. Earmarking is still common with unfunded defined benefit (final salary) schemes.

Pension sharing - a percentage of the pension fund(s) is awarded to the ex-spouse with a pension then being set-up in the recipient’s own name. They have control over who the new administrator is, where the monies are invested and when the benefits are taken.
Sharing assets
  The pension sharing order in England uses percentages so the monetary amount will normally be different by the time the sharing order is processed and monies paid across to the new provider.
  Due to economic factors the corresponding pension fund value of a final salary scheme, which is expressed as an income payable per annum, has increased in recent years. This can mean that previously when offsetting would have been used, where other assets are shared instead of the pension, in some circumstances it has now become impossible.
  When a pension fund is shared the amount received counts towards the recipient’s lifetime allowance overall pension fund limit. The current lifetime allowance is £1 million. When benefits are tested, if the fund is over the limit, a tax charge will be payable. The lifetime allowance is reviewed and will be increasing to £1,030,000 on the 6 April this year. The amount shared is not included within the current £40,000 maximum contribution allowance per tax year.
  If multiple pension funds are being shared and there are administrative costs to do this payable to each provider it may be more cost effective to share a larger percentage of fewer pension funds. If some insurance companies don’t charge a fee these could be the ones used to raise the required share from.
  Care needs to be taken when pension policies include a guaranteed annuity rate, guaranteed minimum pension or protected tax free cash under the pre April 2006 rules. It might be best to avoid sharing these policies, if possible.
  Always review Wills, pension death benefit nominations, investments held in trust and insurance policies following a divorce to ensure arrangements are still fit for purpose.
  If the aim is to secure a guaranteed net income for an ex-spouse the cost of purchasing this income via an annuity can be obtained. If any health or lifestyle issues exist the fund value needed to provide this income could be lower.

Gareth Says... 

“Investing isn’t for the short term”
More than ever, people think the test of an investment’s validity is whether it “worked”. If they beat the FTSE 100 index over any period, no matter how poorly thought out or dangerous their tactics, people boast they were “right”. However, investing successfully over a lifetime has nothing to do with being right in the short term. To reach your long term financial goals you must be sustainably and reliably right. While the techniques that are so trendy now - day trading, ignoring diversification, flipping funds, following “systems” - may seem right on a given day, they slash your odds of being right in the long run.
  Investement growth
This is why we put our faith in proven fund managers. They can also have peaks and troughs - that is why our ‘gold list’ exists and why we advise upon switching, when we deem it appropriate.

If I was travelling the 160 miles from Manchester to London and I observe the 70 mph speed limit, I’ll drive this distance in about two and a half hours. If I were to travel at 160 mph, I can get there in an hour. If I try this and survive, am I “right”? Should you be tempted to try it too because it “worked”? The flashy new ideas for beating the market are much the same: in short streaks, if you’re lucky, they will work. Over time, they will undoubtedly ruin your financial well being.
Please bear in mind that tax year end is fast approaching. If you want to discuss using all or the remainder of your £20,000 ISA allowance for the 2017/18 tax year, please contact your M&T adviser. Please do so as soon as possible. Also, if you want to discuss investing next tax year’s allowance, which is to remain at £20,000, we can set the wheels in motion now.

Staff Matters

Sssshhh... Stuart recently welcomed a new addition into his fold, weighing in at 2.5 pounds, a 12-week old Chihuahua. Stuart’s wife decided to spell his name “Whisper”, not as Stuart wanted “Wispa”, the chocolate bar! Stuart tells me his favourite nibble is oak cured smoked ham and favourite TV programme is Match of the Day.

I’m sure Stuart & Adam will now be meeting up for dog walks together. We just need to work out how we can get them to play nicely, the dogs that is, not Stuart & Adam!


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