Listen below to my interview with Ari Kaplan, host of “Family on Air” on 96.7 FM Zoomer Radio where we discussed the unique financial concerns couples face when contemplating “grey divorce” and our book When Harry left Sally.
I believe one of the most important roles I have, as a Certified Divorce Financial Analyst (CDFA) is providing a reality check for my clients before , during and after divorce. I am pragmatic and not judgmental. I take the words in settlement agreements and turn them into numbers. .
Firstly, I do this by having a systematic approach for pulling together the financial numbers and information that they need to start separation discussions whether the are working in mediation, collaboration or traditional negotiations.
Secondly, I’m focused on finding solutions that work in both the short and long term. I create projections based on clients goals and possible settlement options , whether that be proceeds from sale of their house , impact of varies duration and levels of support, impact of future income and savings. These projections educate and show clients the future implications of what is being proposed. They also show the the impact of other decisions clients have control .
I had a client who was the main breadwinner of the family. She went back to school to upgrade her skills when her husband was downsized from his corporate job. She found a very well paying position and has had a number of promotions since starting at her company. Her husband found it difficult to get back into the workforce in his previous role. Discouraged, he started a small consulting practice but wasn’t having much success in getting clients. When they decided to separate, her income was substantially more than his. She was very resentful of having to make Spousal Support payments to her husband. This looked like it was going to stall the settlement negotiations. I worked with her to understand her current & future spending, her future income and have her see the impact of various levels of support. I helped her set priorities going forward. Once she could see into her financial future, she agreed to a spousal support payment schedule she and her spouse could live with as she now felt confident about her own financial future.
Divorce is not only the ending of a marriage but it involves the unbundling of the business part of the relationship .. separating assets.. the house, retirement savings, pensions, dealing with debts, future income, future financial goals. If you are facing divorce.you are likely beginning to understand that there is a legal, emotional and financial aspect of divorce. You should reflect on where you’re at and prioritize what professional help you need most. You may need to get emotional support from a counsellor or therapist to prepare you emotionally and financial advice from a divorce financial consultant who will provide the financial guidance to have you ready to begin legal separation discussions
If any one of the situations listed below is your case, you have good reason to get some expert financial advice; if you face two or more, going without seeking advice, is risky.
Divorce, for most couples, is an unexpected event as a whole. Couples need to be prepared for unexpected financial changes and challenges they will face as divorce is the breakup of not only a family unit but the breakup of an economic unit as well. Each spouse needs to look at their finances from both quantitative and qualitative viewpoints to understand what’s important to them. In other words, divorcing couples need to take into account everything from balancing a new budget to maintaining a certain quality of life. Knowing this information will allow them to better assess how they can move forward on their own.
Here’s a short list of financial questions divorcing couples should consider:
•Do they have a “divorce” budget? How will they pay for the professionals they may need to work with?
•Have they thought about how bills /expenses will be paid until a final agreement is reached?
•What will it cost to maintain two households rather than one?
•Have they considered renting rather than purchasing another home?
•Have they reviewed all of their children’s activities and prioritized what they can do and what they can afford?
•Will the stay-at-home spouse need to consider going to work full-time or part-time?
•If there is a business, does the business need to be sold?
•Is there existing debt (mortgage, lines of credit)? Have they thought about how this debt will be managed? Will they need to take on additional debt to fund future payouts?
•How much will the divorce affect retirement plans?
When working with a collaborative team that includes a financial neutral during your divorce, questions like these ones are often raised and then answered. This allows couples to make informed decisions about their financial plans and futures.
Major banks in Canada recently announced a reduction to their fixed rate mortgages. It seems bank executives are more confident about the housing market and the likelihood of a major correction in housing prices.
This should provide good news for people who are separating and making decisions of how they split their assets, in particular, the matrimonial home. For many, keeping the house is important for couples with children and keeping a stable environment for them. For older couples, whether they choose to buy a partner out and remain in the matrimonial home or sell and each purchase a new home, lower interest rates allow for more flexibility when it comes to possible settlement options.
Managing two households costs more than maintaining one household. With late in life divorce, retirement plans are greatly affected by housing costs.
Many people finance equalization payments owing to spouses through refinancing existing mortgages, so lower mortgage rates in those situation helps.
If selling the matrimonial home is part of a settlement plan, lower mortgage rates make home buying more attractive. If keeping the matrimonial home is an option, managing cash flow is easier with lower monthly mortgage payments.
The home you want to keep or the home you want to buy after divorce may
now be a real possibility.
Our book “When Harry Left Sally or Sally left Harry – FInding your way through Grey Divorce” has be published. It will be available for sale at www.whenharryleftsally.ca early January 2014 . You’ll be able to find the EBOOK version on AMAZON, ITUNES and KOBO.
The book provides insights on what to expect of a “Grey Divorce” or divorce that occurs late in life. We have taken our real life experiences and give couples splitting up an idea of the financial and personal situations that await them. The books sets out to reassure and advise older couples going through divorce.
I’ll post the official launch details shortly.
Announcing the upcoming publication of our book “ When Harry Left Sally – Finding your way through Grey Divorce” . It will be available in a couple of weeks. I’ll keep you updated to let you know when it will be available to order from online retailers and dedicated website for “When Harry Left Sally”.
Co-authored by Marion Korn, a well known senior family lawyer and mediator, and Eva Sachs, a skilled Financial Planner, specializing in divorce, the book shines a light on the growing numbers of grey divorcees and their unique concerns and goals. Through stories collected in their years of practice together, Marion and Eva challenge the reader to change the way they approach their divorce. This book is the roadmap every divorcing grey couple needs.
Here’s a preview look!
According to a recent AVVO divorce study, couples are most concerned about the costs of divorce. People today have more choice in how they will proceed with their divorce..from doing it themselves , mediation, collaborative practice, lawyer negotiations to court. The survey indicated that a majority of people (58%) site the cost of divorce as a major factor/concern in moving forward with the divorce. When reviewing what approach may work best for a family, making the right choice in terms of professional fit , control, timing are all things that need to be considered. However, the reality of the total expense for the family appears to be a big part of the decision.
It’s important to establish from the beginning some sort of “divorce budget”and understanding the value proposition of any process you ultimately choose. Being quoted the hourly rate or first retainer is not enough information. Getting the answer .. “it depends” to the question “How much will this cost” may not be good enough anymore. Understanding that other professionals are part of a divorce team and learning what they all do in the process, what they charge, what their involvement may be , and what couples can do on their own, helps in understanding what the ultimate costs may be .
There was a recent article in the GLOBE AND MAIL about rising costs of household expenses. You may be surprised with some of the findings.
Do you know that food purchased from stores spending was down 1.8% but food purchased from restaurants was up 3.6% from a year ago? Landline telephone services were down almost 6% while cellphone pager and text messaging services were up over 10%. Clothing and accessories were down almost 3%.. is that a result of more competitive pricing with US retailers coming to Canada?
The largest increase was surprisingly in pet expenses … may not reflective in higher food prices but rather additional health care bills as people to improve and extend the life of their dear pets.
This is all good information. It’s really important information to have if you are facing divorce and need to see how you’ll manage once you’re on your own.
As a followup to my previous blog today take a look at this article from the BBC and UK about the rising costs of divorce. It quotes a report by the Legal Ombudsman for England and Wales showed complaints by clients in divorce and family law were higher than in any other category.
Have you gone through divorce recently? What do you think of the costs involved? At the end of it all, did you get value for what you paid for?