In this edition, we review issues you need to consider whether you're currently contemplating a separation from your spouse or you're in the final stages of a divorce.

Getting Organized

The first step you should take, regardless of what stage in the relationship breakdown you may be in, is to organize your financial affairs. Finding out exactly what assets you and your spouse own and what liabilities that you may have. By knowing the financial positions of both you and your spouse, you can gain insight into your net worth, should you end your relationship. This can also help protect you from the possibility of your spouse disposing of assets without your knowledge, or simply not disclosing them to you.

In addition, you'll need to provide information to the professional advisors for helping you get your financial life back on track. Some examples of documents you should gather include:

• Will and power of attorney documents
• Marriage contracts/domestic agreements
• Home ownership documents, including title deed and mortgage statement
• Current bank and investment account statements
• Tax returns for the past three to five years
• Business financial statements and tax returns
• Shareholder/partnership agreements
• Company pension and/or employee compensation statements
• Registered account statements
• CPP information statements
• Current statements of all outstanding debts, including credit card statements
• Trustees and any associated loan documents
• All insurance policies (such as home, auto and life)

Figure out your sources of income

Divorce proceedings can often carry on for an unknown length of time, which can result in a period of financial uncertainty. During this period, you will need to know what sources of income you'll receive to support yourself and any dependents.

Sources of income can include employment income, interim spousal and/or child support, income from your investments and income from registered plans such as RRSP or RRIF.

Establish your own credit

It's important to establish your own credit record so that you'll have the ability to get credit if needed. If you've never had a credit card in your own name, consider applying for one. You may want to do this even before you can go forward deciding whether to separate.

You should notify all other known creditors of your change in status. If possible, make sure your spouse can't further bind you to any new debt.

Notify your investment professionals of your status

If you hold any investment accounts in joint names with your spouse, make sure you notify your investment professionals of your relationship status. You may want to resend any trading authorization granted to your spouse.

Finding the professional help you need

Consider seeking professional assistance to guide you through the separation and divorce process. Qualified professionals such as lawyers, accountants and financial advisors can help you address the various legal and financial issues that arise during the relationship breakdown.

A lawyer

There are many legal issues that must be sorted out on a relationship breakdown. A qualified lawyer can advise you in deciding how best to resolve the outstanding matters between you and your spouse. There are ways to resolve disputes with your spouse outside of the court system that you may wish to consider. These include mediation, collaborative processes, arbitration and negotiation.

Even if you and your spouse are able to agree on issues, it's still worthwhile to consult a family lawyer church ensure you're fully aware of your rights and responsibilities.

Support payments

If you're married, you may be entitled to receive spousal support from your former spouse. The amount of duration of any spousal support awarded will generally depend on the needs, means and other circumstances of each spouse. Spousal support advisory guidelines are based on the income of the person providing the support, as well as the number of children involved. It can be awarded on an interim, lump sum or fixed-term basis. It can also be varied if there is a change in circumstances.

Parenting arrangements for children

A lawyer will help you negotiate the terms and conditions from custody and access to your children. Custody and access matters are generally resolved by considering the best interests of the children, taking into account their physical, emotional, intellectual and moral well-being.

Division of family property

Married and civil union spouses are generally entitled to equal division of property accumulated during the marriage, subject to certain exceptions. For example, gifts or inheritances received during the marriage may be excluded from the division of property. A lawyer will be able to help you understand and determine what kind of property is subject to division, how the property is valued and how the sharing of property will be achieved.

An accountant

Working with an accountant can help navigate the various tax implications associated with separation and divorce. An accountant may also be able to help you determine the current value of your or your spouse’s pension plan or the fair market value of any jointly owned business.

A financial advisor

A qualified financial advisor can know all the details of your personal financial situation, understand your goals and objectives and be able to work closely with your lawyer and accountant to achieve a financially equitable settlement that's right for you.

You may wish to explore the possibility of creating a financial plan. A financial plan will address questions such as: Can you afford to keep the house? Do you have enough money to retire? What kind of lifestyle can you afford?

Services your advisor can help you with:

• Analyzing your cash flow
• Determining your interim and long-term needs
• Is there any of the education costs for your children
• Facilitating the transfer of investment or retirement assets from your former spouse
• Preparation of network statement and budget

A financial advisor can help you set your financial goals and priorities, both for the immediate future and long term. The immediate priorities will be to secure sufficient cash flow, interim support payments or line of credit to cover necessary expenses and to maintain an adequate standard of living for yourself and your dependents until your financial matters have been resolved.

Your long-term goals and priorities could also include retirement planning, provisions for dependents and developing an estate plan. These planning objectives will be made clearer once the separation is finalized and the division of property support payments are confirmed.

Helping you during times of transition

During times of transition in your life such a separation and divorce, it's important to have all the support and guidance you need. There are many issues to consider during your relationship breakdown, and surrounding yourself with a team of qualified legal, tax and financial advisors can help you navigate through this difficult process. Taking the right steps to get your finances organized will go a long way in establishing your independence and help put you on the right path for financial stability.

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