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Overview of Divorce and Separation Issues

Statistics Canada projects that 40.7% of all marriages will end in divorce before the thirtieth anniversary, based on 2008 data.  When people think of separation and divorce, they usually think of younger couples.  However, based on Statistics Canada data for 2008, 31.7% of couples aged 60 to 64 will end their marriage with divorce, although the average age ranges from 42 to 44 years.

Separation and divorce are complex processes filled with the unknown for most people.  This article will provide you with an overview of some of the issues.  Also read my article on Common Mistakes in Separation Negotiations to help protect yourself.

Throughout the process, you need to deal with your stress and emotions.  You are wise to ensure that your emotions are under control prior to making decisions.  This will help you reach long-term satisfactory solutions, not short-term fixes to make the pain go away.  Meeting with a family professional to see if they can help you, even if only for an initial one-hour meeting, is money well spent.  An early issue is finding living accommodations for the person(s) leaving the family home.  Another is arranging custody of your children, should you still have dependent children.  The family professional can help you work through these issues, and refer you to other professionals, such as a lawyer, for help.  Children who are still at home are often impacted for life by their parents’ separation.  The family professional can help you explain to the children what is happening.  They can work with parents to make a parenting plan in their best interests.  These needs tend to be immediate especially in an abusive home.  Your doctor, lawyer or other people you know can make a referral.  You can also check out the websites for collaborative practice groups or mediation associations at the national level (consider the International Association of Collaborative Practice – Find a Professional web site) or search locally in your province (in PEI, see Mediation PEI (www.mediationpei.com)).  Those sites have listings of social workers and psychologists who work in this field.

You can work through the divorce process by various means, which include doing it yourself, mediation, arbitration, collaborative practice and the normal litigation process.  The Community Legal Information Association (CLIA) (www.legalinfopei.ca) can provide you with free information on these processes and much more information related to separation and divorce.

From a financial perspective, there are three key areas for decisions, being division of assets, child support and spousal support.  This is where a Financial Divorce Specialist or an experienced financial advisor can help you.  Legislation and the court will dictate your entitlements if you cannot reach agreement between yourselves.

Your assets, after deducting your debts, are divided based on the value earned while married.  Certain items may be excluded under specific circumstances, such as an inheritance, for example.  One of the challenges is placing values on assets, particularly real estate, pensions from work, and businesses.  Maybe you understand how these values are determined and can mutually agree on them.  Otherwise, rather than argue and spend thousands of dollars in legal fees, hire a real estate appraiser, a pension valuator and/or a Chartered Business Valuator to determine the values of such assets.  Your costs will likely be much lower.  I find that few people understand pension and business valuations, and your settlement could be affected by tens of thousands of dollars if these assets are not correctly valued.  In particular, the value of a defined benefit pension plan may be provided by your employer.  However, this is seldom the correct value for divorce purposes.

If one person has sole custody of the child, your entitlement to child support will depend on the income of the payer.  Where physical custody of the children is shared approximately equally by the parents, it is determined using the incomes of both parents.

Spousal support depends on a number of legal factors.  First, it must be determined that a spouse is entitled to spousal support.  Then, the amount of support must be calculated, which is usually determined after looking at both spouses’ incomes.  Finally, the length of time for which payments must be made, or whether a lump sum settlement is appropriate, needs to be decided based in individual circumstances.

Separation and divorce is a complex and emotional.  Ensure you get good advice, and have an understanding of your rights and entitlements before signing any agreements.  Unless both spouses are fully aware of the impact of their agreement, legal and financial advice is essential.

Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum