Friday, March 9, 2018 / by Ruth Ballantyne
Hot, sunny summer weekends are picture-perfect for tying the knot. Churches, community halls and public gardens are full of happy bridal parties posing for group shot after group shot. But sometimes when the wedding bells stop, an irreversible distance grows between the couple, which sometimes leads to divorce or separation.
Analyzing the financial consequences of separation or divorce
The most recent divorce indicator - which does not measure the break-up of common-law unions - predicted that more than one in three marriages would end in divorce before the 25th year of marriage, according to Human Resources and Skills Development Canada. Currently, the divorce rate in Canada is 40%. And the typical time it takes to settle a divorce or separation is 1.5 to 2.5 years, at a cost of $5,000 to $100,000. It's for this reason that the experts at Desjardins Financial Security suggest that you should be prepared financially and legally.
• Consult a financial advisor or accountant: Similar to getting marriage, divorce or separation results in major changes in a couple's financial situation. But with some help from a financial advisor, you should be able to analyze the financial consequences of your new situation and make some decisions. Be frank and honest about your finances. You will need to make a new budget to cover your various expenses like rent, groceries, etc. You and your partner will also have to split up the once shared expenses, such as mortgage payments, personal loans, etc. Joint bank accounts, credit cards, investments, etc., will have to be separated and property split up fairly between you. And then there's the Canada Pension Plan and employer pension plans to consider. Also check your credit rating to ensure you're not hit with any debt surprises.
• Get legal advice: A lawyer or notary can help you prepare a divorce agreement to legally end your marriage. Do you have a will? If not, have one drawn up. If you already have one, is it up to date and do you have a power of attorney? This might be a morbid topic for some people, but clearly defining your final wishes and naming the person who will act on your behalf is a vital part of your financial plan. This information should be updated every five years.
• Taking care of yourself and your family: Protecting and maintaining your standard of living is important at every life stage. Do you have a plan for how you'll manage your obligations if you become ill or injured? Your financial advisor can help you to review your insurance coverage and will make suggestions if your portfolio needs updating. Consider also changing your insurance policies and retirement savings plan beneficiaries. Look over your marriage contract or common-law agreement to determine what clauses apply in this situation.
To find more information about dealing with a separation or divorce, visit the Getting divorced or separated section at www.desjardinslifeinsurance.com.