In 2008, Statistics Canada estimated that 41 percent of unions would end in divorce before the 30th year of marriage, an increase from 36
percent since 1998. Not surprisingly, many women face financial uncertainty following a split from their significant other.
While a newly inked divorce decree might give you some emotional closure, you're going to need to do some serious planning in order to prepare your finances for your newly found independence. Settling with your spouse,
simply for the sake of settling, could affect your life five, ten, or even 20 years from now.
Before you sign the paperwork, first consider these seven tips to lessen the financial impact of ending your marriage.
Lawyers aren't cheap. (Remember that when you and your soon-to-be ex-spouse are arguing over trivial things, simply for the sake of torturing one another!)
Legal fees can quickly eat into assets that could have been used for more important things, like your child's education, for example.
If you're having difficulty agreeing on important issues, like spousal support, child support, or the division of property – or are looking to divorce in a
more mediated, amicable and efficient way - consider working with a mediator or arbitrator before filing a court case (for example, Fairway Divorce’s collaborative model). You could be looking at a more reasonable $10,000 or less in fees
(versus tens of thousands of dollars if you go the traditional route).
It's important to note that mediation and arbitration might not be able to settle all aspects of your dispute (namely when you need to discuss emergency
monetary support or visitation rights). In those cases, you may need to seek the assistance of the courts.
Divorces are emotionally charged. These conflicting feelings can often lead to bad financial decisions during the settlement period. This is because the
parties tend to hang onto things that are familiar, such as the matrimonial home.
As difficult as it might be, try to recognize that these emotions are temporary. The debt and responsibility of handling mortgage payments on your own will
last much, much longer.
It's not uncommon for one partner in a marriage to take charge of the family finances. If you've been relying on your significant other to manage the
books, now's the time to educate yourself on your overall financial picture. You need to know what your assets are, as well as your liabilities. Collect
account numbers and whatever documentation you can find before heading to your bank for further clarification and guidance.
It's important to note that a divorce doesn't just distance you from your spouse; it should also separate you from your significant other's debt. If you and your soon-to-be ex-spouse have a joint credit
card, or any other revolving debt, don't wait to pay it off. To a creditor, you're both equally liable, regardless of whose card the purchase was charged
Divorced individuals need to know that a divorce decree doesn't trump a loan or credit card agreement. As such, just because your divorce agreement says
that your spouse will take on the joint credit card debt, that doesn't remove your name from the account, nor will it relieve you of your responsibility if
your ex-partner defaults on the account.
Your best bet? Close all joint accounts before your divorce is finalized. Granted, this could have an adverse affect on your credit score. However, it's a
better strategy than starting your new single life buried beneath your ex's debt.
Normally, if one spouse earns more money than the other, he/she may have to pay alimony, also known as spousal support. Spousal support is decided on a
case-by-case basis; however, there are Spousal Support Guidelines in
place to help the courts decide what is a fair settlement amount. It pays to understand these guidelines before you enter into negotiations.
Children are entitled to support from both parents law if they are under the age of majority and thus still dependent. The age of majority in Canada is
18 or 19, depending on the province or territory where your child resides. You and your soon-to-be ex-spouse may agree to achild support settlement outside of court using Child Support Guidelines as a reference. These guidelines will be used
if a judge is called upon to decide a support settlement.
If you can't afford it, you can't have it. That's the mantra of a newly divorced individual, so get used to it. Don't wait to figure out what you can
afford until it's too late and you're knee-deep in debt. Plan a budget that takes into account all of your income, including any alimony, child support,
and employment income. This will help you to determine what you'll need to cut from your lifestyle in order to remain financially secure.
Hiring a financial team might seem like an unnecessary cost during your divorce proceedings, but in the long run, not hiring one could end up costing you
far more once your divorce is finalized. At the very least, consult with a financial planner (ideally, a financial divorce specialist) and a family lawyer. Ask them to review
your settlement for problems and don't be afraid to ask them for further explanation with respect to your legal rights.
Lessen the long-term impact Breaking up is hard to do. However, with a little foresight and professional guidance, it doesn't have to have a lasting impact on your financial future. Remember, divorce is devastating. Whether it’s financially devastating over the long term is remarkably up to you.