Divorce may be common. It is rarely easy.
Divorce in North America is so common today, it’s hard to believe that once it was considered something to be hidden, or a failure of some kind. Educators Financial Group offers advice on the finances of divorce – as a complimentary service for our clients.
Quick – who doesn’t know someone who’s divorced?
According to Statistics Canada*:
- 33% of first marriages end in divorce
- 38% of couples age 50-54 get divorced
- 47.8% of couples 55-59 get divorced
- 31.7% of couples 60-64 get divorced
Divorce can have financial and emotional impacts.
Divorce can involve dealing with complicated issues and have a great affect on your family’s future – both financial and emotional. Questions like: “What’s the difference between personal and marital property?” “How is property valued and divided?” and “Can I afford to keep my house?” are just the beginning. Educators Certified Financial Planner professional Mike Cunningham says, “Getting divorced can be a very confusing time. Most people have a lot of questions about the financial aspects, but other questions, too, like how it will affect their kids.”
Did you know 35% of Canadian children are affected by divorce. Compared to children of married couples, children of divorced couples have twice the rate of anxiety, depression and self-esteem issues. The chances of their dropping out from school is 2 to 3 times higher. And the odds of falling into low income after separation and divorce are 11% higher.
We offer valuable expertise to members of the education community undergoing divorce.
The cost of a typical divorce can be substantial, and range from $5,000 to $100,000. Getting professional advice about its financial implications is a good idea. At the very least, it will help you prepare, and at the most it could help you reduce the costs. Mike can provide financial data to help strengthen a case, assess the financial and tax implications of dividing property and child/spousal support, and determine the short- and long-term financial impact of a proposed settlement.
Mike uses his experience and expertise to provide advice relevant to an educator’s unique financial situation, in order to:
- Minimize potential pension income gaps
- Navigate pension income fluctuations
- Minimize gratuity taxes
- Alleviate summer cash flow concerns
- Alleviate the income pinch from a deferred Salary Plan
Although every situation is unique, Mike suggests clients going through divorce keep these 5 tips top of mind:
1. Consider alternatives to divorce that can cost less and be less onerous.
For example, if you do not want to remarry, and you and your partner mostly agree on what you want t happen when you separate, you can draw up a Separation Agreement that says how you will deal with your issues.**
A Separation Agreement:
- Can be faster, cheaper, and less stressful than going to court
- Lets you and your partner decide what works best for you and your family, instead of letting the court decide
- Lets others involved in your children’s care know about the agreement, such as their school, daycare, and doctor
- Makes it easier to prove what you and your partner agreed on than with a verbal agreement
- Can be used to get help from the Family Responsibility Office if there is a problem getting child support or spousal support
2. Some of your decisions will impact your taxes, so keep taxes in mind.
3. Don’t be “house-poor”.
For example, you have the house but not enough income to pay for expenses and fund your lifestyle.
4. Exercise caution when splitting up retirement plans and pensions.
5. Update wills, trusts and beneficiary designations on retirement plans and insurance.
Educators Financial Group is here to help clients with their financial concerns throughout their lives. We can help you navigate what can be a tumultuous time of divorce and/or separation, by answering your financial questions.
*Statistics Canada, 1993-2003
This information is provided for informational and educational purposes only. It should not be treated as legal advice. If you require legal advice, contact a lawyer.