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Questions and/or an Agenda for Your Initial Separation Financial Meeting

Starting the separation process can be a daunting task.  The emotional turmoil of the separation combined with the unknown factors that will impact you create huge challenges.  There is so much you do not know, and so many important decisions, combined with so many emotions.  You may not even know what questions to ask.  To help you, I provide you with this list of questions that I actually use as my first meeting agenda unless clients show up with their own specific meeting plan.  This process is all about helping you – do not be shy or embarrassed.   Take a friend, adult family member or your counsellor with you if you wish.  Professionals working in family law understand your lack of knowledge and the emotional stress, which is why it is important to work with a person experienced in family matters.

If you will be working with a trained financial divorce professional, such as a Chartered Financial Divorce Specialist or a Certified Divorce Financial Analyst, I suggest meeting them early to understand the finances.  If you will be working without such a financial specialist, then use this agenda for your mediator or lawyer.  Many accountants do some work in this area, but are not trained in how all of the financial aspects of separation and divorce work.  Be sure you have a full understanding of financial implications (immediate and long-term) before going down this very expensive path.  And, as they say, knowledge is power – knowing the rules can help you ensure you receive your proper entitlements.  Knowledge will also help you know that your legal advisors understand what they are doing and/or are not misleading you into thinking you can get more than is fair.

Your meeting agenda is up to you.  Unfortunately, it is a lot of information – perhaps too much for one meeting.  However, in order to keep your fees low (especially since you are likely paying by the hour), write down your questions before your meeting so that you and your advisor can focus on the answers.  I hope the following list helps you.

Topics to discuss, data to provide, and issues to understand:

  1. Review the financial professional’s training in separation and divorce, related experience and his or her approach to working with you
      • Confirmation of confidentiality
      • Hourly rates
      • Determination of whether you want a written summary of this meeting, and at what extra cost
      • May you record the meeting?  This may be easier than note-taking and less expensive than a follow-up letter.
  2. Set the agenda by identifying your specific questions – write down your questions and concerns before the meeting.
  3. Provide your status (I often use a form to be completed before the meeting, available here.)
      • Date of separation
      • Date of marriage (if applicable)
      • Date of cohabitation – if common-law, or if common-law prior to marriage
      • Children involved – current custody, ages, education, disabilities, other issues
      • Names of lawyers / mediator / family counsellors / other professionals with whom you are working
        • Provide written permission for discussion of your information with other professionals if you so wish
      • Determination of the legal process you are using, or if undetermined, a review of options (typical litigation process, mediation, collaborative practice, do-it-yourself)
      • Discussion about the importance of emotional stability to make good financial decisions
      • Overview of prior relationship breakdowns, and/or children of other relationships
  4. Discuss an overview of the financial issues (further legal advice will likely be required)
      • Equalization of assets
        • Valuation of current assets and liabilities
        • Valuation of assets and liabilities at date of marriage
        • Differences between marriage and common law rights
        • Exceptions, such as inheritances and insurance settlements
        • Tax issues – valuation and transfers; non-deductibility of periodic payments
        • Valuation issues (pension, real estate, business)
        • Financial settlement options/challenges (e.g. ability to make payments)
        • Maintenance of the family home after separation, including occupational rent by the person living in it
        • Special issues if a private business is owned by one or both spouses
        • Sale of property and related tax issues before the divorce is finalized (e.g. election to avoid capital gains attribution under Income Tax Act section 74.5(3)(b))
        • Reminder of forms that may be needed
          • T2220 for RRSP division by tax-deferred rollover
          • T2091 for principal residence transfer
          • Election per ITA 73(1)(d) if rollover not to be used
          • Election per ITA 74.5(3)(b) to avoid capital gains attribution on sales before divorce
          • CPP credit splitting (rules differ for unions ended between 1978 and 1986 versus later) (Service Canada Form ISP1901)
      • Child support
        • Sole, shared, split, joint custody definitions and differences
        • Determination of income for child support payments
          • normal calculations – employment, business, etc. and documentation needed (tax returns, business statements, pay stub)
          • evidence issues if accusations of unreported income
        • Basic support and Special expense sharing
        • Payment of interim support and ongoing common expenses until separation details are finalized
        • Eligible Dependant Credit and Canada Child Benefit, etc. based on custody, especially shared custody issues
        • Reminder of forms that may be needed
      • Spousal support
        • Entitlement (which is a legal issue)
        • Determination of income and support amounts, including a discussion of the Spousal Support Advisory Guidelines
        • Taxation – periodic versus lump sum payments, retroactivity limitations
        • Duration
        • Payment of interim support and ongoing common expenses until separation details are finalized
          • equal, periodic maintenance payments vs. irregular payment of bills
        • Tax credit choice in year of separation – spousal support deduction or spousal amount credit
        • Reminder of forms that may be needed
          • T1158 Spousal Support registration
          • T1198 for tax averaging of lump sum receipt of retroactive taxable support
          • T1213 to reduce income tax withholdings if taxable support is being paid (just ask your employer or pension payer to increase tax withholdings to avoid a big bill at tax time or quarterly installment requirements if taxable support is being received)
      • Personal budgeting
        • Will you require a personal financial budget
          • for legal proceedings
          • for personal need and understanding that you will be okay financially
      • Post-separation payments and bookkeeping
        • How should post-separation expenses and debt payments be paid and tracked so they can be properly shared
        • Are joint accounts and credit lines still being used and how should they be handled
  5. Other topics to discuss
      • Life insurance requirements for children by custodial parent and by parent paying support, as well as regular needs for ongoing cash flow security
      • Group insurance coverage – maintaining existing coverage and assuring future access to coverage
        • do not change beneficiaries until seeking legal or financial advice
      • Other insurance needs – critical illness, disability, vacant house coverage, any other specific needs
      • Are there any foreign country financial issues?
      • Updating of Wills, Powers of Attorney, Health Care Directives, joint ownership issues, beneficiaries of life insurance, RRSP/RRIF/TFSA, and segregated mutual funds
      • Future of the Registered Education Savings Plan for the child(ren)
      • Tax deductibility of professional fees (re: support)
      • Segregating bank accounts, credit cards, lines of credit and other steps to prepare for separation.  See my article on Preparing for Separation.
  6. Additional information resources
  7. Engagement letter documentation – is there a letter or contract to be signed?  How are fees to be billed?

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