The start of a new year often brings a rise in divorce rates.
5 ways I can help you.
By JF Droz, January 10, 2019
Did you know that more people seek legal advice or file for divorce in January than in any other month of the year? In fact, the first Monday back at work is known as “Divorce Monday” in Great Britain. There is plenty of speculation of why this occurs, but on average, a person spends about two years thinking about divorce before ever taking action. It’s a tough decision.
My clients often refer to me as their personal Financial Coach, as I help them effectively manage their financial life, so it’s not uncommon that I’m the first person they turn to, before even calling a lawyer. I’m a great listener, but as a family man, I always encourage them to seek individual or couples counseling before making any final decision.
Depending on whether you were involved in your family's finances, you are probably either feeling confident about your financial situation, completely terrified or somewhere in between.
Regardless, with so much to deal with, here are five areas you need to start thinking of and where I can help:
- Understanding your financial picture. It’s not uncommon that one spouse is more into finances than the other, we all have our preferences. However, it’s critical you have a full understanding of your net worth and copies of all your statements; your assets (property, investments, retirement benefits, collectibles, etc.), liabilities & debts, income, expenses, and past tax returns. Having this handy will make your first meetings with your lawyer more productive and potentially save you money in legal fees.
- Putting together a comfortable post-divorce budget. Mapping out a budget is crucial as you aim for the divorce settlement you want. Going forward you will no longer benefit from income splitting; each home will incur its own set of expenses. This means it will likely cost more to live post-divorce than when you were married and living under one roof. You may have to consider reprioritizing expenses, so you don’t eat into your retirement money. I can help you put together a realistic budget that fits your needs.
- Reviewing your retirement plan. Keeping your retirement plan on-track post-divorce may be challenging, but it's not out of the question. This is something you need to review early as your long-term financial future ultimately hinges on making the right decisions when negotiating your settlement. All your plan inputs will have to be examined (group plans, pensions, CPP, insurance, RESPs, trusts, etc.) to figure out how to address any potential funding gaps after the division of the marital assets. We have great resources at RBC Wealth Management to help you build your retirement plan.
- Reviewing your investment options and risk tolerance. Navigating the world of investments can feel perplexing, as there are so many choices. Before rebuilding your investment plan post-divorce, you will need someone in your corner to help evaluate your investment allocations to make sure they are appropriate for your risk tolerance and your time horizon.
- Updating your beneficiary designations and estate plan. It is likely that your soon to be ex-spouse is your beneficiary on everything from your life insurance, RRSPs to company retirement plans. You will need to update beneficiary designations (unless your agreement states that your spouse is to remain the beneficiary), get an updated will, health-care directive, and Power of Attorney. These are essential documents for you to either establish if you don't currently have them or to update them. There are many benefits to having a will including allowing you to decide how your assets are distributed after you die vs. having the court system decide.
If you’re about to split up, ideally, you should find and meet with your own financial advisor, a different one from your spouse. A full understanding of the household’s finances is information a lawyer will need and can have a significant impact on the make-up of your settlement.
Call me at 416-699-4550 or send me an email at firstname.lastname@example.org for a no-obligation consultation. You can also click here if you want to send me a question.