Separation, Divorce and Your Finances – The Two First Steps.

Nov 02, 2020 | Jean-François (JF) Droz


Going through the breakdown of a relationship is heartbreaking and coping with the emotional aspects is a big part of your journey. There are also legal and financial issues that need to be addressed to protect your financial health.

If you have children, custody and access will have to be determined. Financial support for you, your children, or your spouse will have to be considered, and property division to be settled. It's a lot, and managing your finances can be overwhelming at the best of times. It's critical to get advice as the decisions you make or don't make during this transition will impact your financial picture and your long term financial well-being.

Even if you later reconcile with your spouse, it's a good idea to know where you are. It's never too early or late to plan for your financial future.

Step 1 –Organize Your Financial Affairs and Understand Your Financial Picture

Regardless of where your relationship stands, it would help if you started organizing your financial affairs. Start by pulling together all required information to understand where you and your spouse or partner stand with the assets and liabilities you may have. This information will help you know your net worth and the financial position you are starting from should you legally end your relationship.

This information is a critical step in disclosing all information between spouses and essential information your financial professional will need in order to advise you. Pulling it together may even save you time and money.

What you will need:

  • Your Net-worth (your total assets minus your total liabilities)
    • List of all your assets, including liquid assets (e.g., bank accounts), investments (e.g., mutual funds), tax-deferred and tax-free investments (e.g., RRSPs), personal property (e.g., residences
    • List of all your liabilities, including short-term (e.g., credit card) and long-term (e.g., mortgages, car loans)
  • Your Cash-Flow (your total income minus your total expenses)

    • List of all sources of income (e.g., wages, dividends, pensions)

    • List of all expenses (e.g., mortgage, housing, food, transportation, child care)

  • Other essential documents you should gather include benefits, birth and marriage certificates, will and power-of-attorney (POA) documents, marriage contracts or domestic arrangements, title deeds to your home or any other property, ownership records for vehicles, trust deeds, and insurance policies.

  • Establish your own credit: it’s essential to do this to secure credit should you need it. You may wish to do this even before deciding to separate. Once you have your own credit, you should think about when to close all joint accounts. You should also notify all creditors of your change in relationship status to make sure your spouse can’t further bind you to any new debt.

  • Open your own bank account: if you don’t already have one, open one. Afterward, consider closing any joint accounts shared with your spouse. If they have to remain open, ask your bank that both signatures be required to make any transactions.

  • Notify your investment professionals if you hold any investment accounts in jointly with your spouse. Check with your professional about rescinding any relevant authorizations.

Step 2 – Assemble YOUR team of Professionals.

You should seek professional assistance to guide you through the separation and divorce process. Professionals such as lawyers, accountants, and financial advisors can help you with the various legal and financial issues that will arise during a relationship breakdown.

If you are unsure which professionals to consult, an excellent financial advisor will refer you to experts. It's quite common for a financial advisor to work with them to ensure all aspects are considered to keep on track financially.

  • Your Family (Divorce) Lawyer will help you understand your rights and responsibilities, assist you in resolving and handling all the legal issues that must be sorted out between you and your spouse, and help negotiate issues on your behalf. Some of the issues include spousal support, child support, parenting arrangements, and family property division.
  • Your Accountant will advise you on the various tax implications associated with separation and divorce. These may include child support, spousal support, and lump sum payments, CPP/QPP splitting, legal fees, transfer of property, transfer of investments and registered plans, as well as attribution rules. They may also help you determine the value of a pension plan, the fair market value of any jointly owned business, and prepare financial projections that can be used in settlement negotiations.

  • Your Financial Advisor: by knowing your financial situation, along with your goals and objectives, your financial advisor will be able to work closely with your lawyer and accountant to achieve a financially equitable settlement. A skilled advisor will help you determine your net worth, analyze your cash-flow, determine interim and long-term needs, estimate education costs for your children, and facilitate the transfer of investment or retirement income from your former spouse. They will also help you set new goals and priorities, develop a budget, establish an investment plan, and recommend a blend of investment solutions suitable to your life stage and risk tolerance. While developing your financial plan, you will want to update your beneficiaries and estate plan and review your insurance needs – all in light of your new situation.

Whether you are currently contemplating separation or in the final stages of a divorce, it's never too early or late to plan for your financial future. It's essential to have all the support and guidance you need during this time of transition. You should find and meet with your own financial advisor, perhaps a different one from your spouse's.

It can be a challenging time, and you don’t have to go it alone. My role is to advocate at every stage, with every consideration, understanding the financial impact of decisions and working towards alleviating my clients' concerns and achieving their goals.

If you have any questions, looking for resources to help you, or would like to discuss your situation, please feel free to reach ou to me at or 416.414.6354.


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