How Canadians Can Financially Prepare for Divorce or Separation

A breakup can be emotionally charged and financially devastating, especially if you don’t get proper advice. Sometimes, you may have to make critical and often irreversible decisions in a short time — possibly while your emotions are running high and you’re not in the best state of mind. Feelings of guilt or a desire to resolve issues quickly may cloud your judgment. Without guidance, this could lead to an inequitable split of assets or other unfavorable results.

What are the key issues Canadians should consider when going through a divorce or separation?

Firstly, it is important to retain family law counsel, as well as investment and accounting professionals you can trust. Next:

What important documents should I gather?

Financial documents for all of your joint and individual assets and liabilities, including:
• Bank accounts
• Registered retirement plans (RRSPs or RRIFs) and any locked-in pension funds
• Registered education savings plans (RESPs) and registered disability savings plans (RDSPs)
• Employer-sponsored pension plans
• Canadian Pension Plans
• Other investment accounts, including Tax-Free Savings Accounts (TFSAs)
• All real property
• Credit cards
• Mortgages and lines of credit
• Loans

Other important documents:
• Will(s) and powers of attorney
• Domestic agreements and any applicable court orders
• Insurance policies
• Tax returns for the current year and last three years

What should I consider when it comes to child support?

If there are children involved, consider child support. You may still have a legal obligation to financially support your children, despite divorce or separation. The amount you may be required to pay in child support is based, in the first instance, on the Federal Child Support Guidelines and provincial or territorial guidelines. The base amount of child support is determined by various factors, such as:
• The paying parent’s gross income
• The number of children involved
• Whether custody is shared
• If there is a valid domestic contract in place that sets out the amount of child support
• If there are special expenses.

What should I consider when it comes to spousal support?

Determine if you’re entitled to receive or required to pay spousal support. The amount depends on the needs of each spouse and their available income and resources (and any domestic contract that was signed at any point during the relationship). The Divorce Act sets out factors and goals to be considered when determining spousal support for married couples. Factors include:
• How long you lived together
• Whether you or the other parent was a stay-at-home parent or worked
• Who the children will live with

What else should I consider in the divorce process?

Property rights on relationship breakdown fall under provincial and territorial law and may or may not apply to common-law couples. You will need to consult with your legal advisor. You should also consider updating your Will(s), powers of attorney, and all beneficiary designations.

Your specific circumstances are unique to you.  You may wish to redefine your financial
goals now that your life circumstances are changing.

If you need help during this difficult time, I can help you navigate the financial aspects of your divorce, and help you with your wealth management needs. Together, we will:

• Review your goals and strategize how we can achieve them.
• Update your budget and cash flow.
• Review your financial plan, your investment portfolio, estate plan, etc.

Jackie Van Vliet, Investment Advisor
Email me or call 604-307-8536

Be sure to prioritize your self-care during this time, and leverage your team of trusted professionals.