17 Apr How working with CDFA makes a difference in Divorce

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.

17 Apr Do I need Financial Advice when I’m going through Divorce?

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.

Personal

  • You don’t understand your situation
  • You have a good income and a busy schedule, so you would be better off if someone else did the paperwork
  • You want to be sure you’re doing the right thing and have the confidence of knowing it’s being done right

Property

  • The division of marital assets and debts is unequal
  • Home or real estate is being kept to sell later
  • Major asset is being divided or sold
  • You aren’t sure how to value some assets
  • You aren’t sure how to value pension from employment during marriage
  • One or both spouses are self-employed owners of a business or professional practice

Your spouse

  • You can’t agree about important issues
  • You can’t get information from your spouse about assets or income
  • You suspect your spouse may be hiding assets
  • Your incomes differ by more than 20%
  • There are special needs or health problems

 

28 Jul How do you prepare for some of the unexpected financial challenges of a divorce?

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.

20 Dec

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.

20 Aug Do you know where you spend your money?

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.

https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20130815/GICARRICK0814ATL

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.

15 Oct Toronto Star Article and Family Support Expo

Check out Ellen Roseman’s Article Separation’s high cost: Spending cut to the bone http://www.moneyville.ca/article/1270309 (from yesterday’s Toronto Star online) in which she interviews me about my role as a certified divorce financial planner and my advice for separating couples.

Also mentioned in the article is this weekends Family Support Expo where I will be on Saturday October 20th, from 1 to 4pm. You can find me at the Collaborative Practice Toronto Booth (booth # 608), please feel free to come by and say hello!

03 Oct Next Divorce Talks Topic – “Tips for Gathering Financial Information in Divorce”

It looks like you’re separating. One of the first steps you’ll be required to do is pull together your financial information … assets, debts, income, expenses.

Where to start? What is required? Where will it be used?

Join us for an information session that will have you learn:

What specific information you need t

o gather
Why this information is required and where it fits
Practical tools for making the information gathering easier
If you or someone you know is contemplating divorce, join us for a discussion about how to best deal with financial information in separation and divorce.

DATE: Wed. November 14th,  2012
TIME: 6:00 to 7:30 PM
LOCATION: 79 Shuter St. Suite 200 Toronto

http://www.eventbrite.com/event/4029811274

04 Sep “Dis” Orientation – Start of school and divorce

Traditionally, autumn is a boom season for divorce, particularly for couples, who wait out the summer at the cottage before returning home to cut their marital ties. Many couples considering splitting decide to wait until after the holidays to break the news to their children. How are these parents going to approach their separation or divorce – and how will it affect their children?  
Obviously school-year separations can be difficult for school-age children. Parents need to bend over backwards to minimize the changes and transitions in their child’s life so as to keep school-related schedules, after-school activities, playtime with friends and other routines as much the same as possible.  

Parents with university aged children face the additional burden of having kids who are moving away from home.  The added stress of dealing with ever increasing tuition costs and related school expenses makes divorce at this stage more complex.

As couples work through their separation agreement, they should be aware of the many financial issues that affect them and their children beyond the traditional items of child support.

They should be considering such things as:

  • Is there enough savings set aside for tuition and room& board expenses
  • How will any shortfall be funded by each parent?
  • Who manages any RESP plan set up for the student?
  • What additional expenses will students/parents incur as a result of parents living apart
  • Who will benefit from any tuition tax credit available to transfer to a parent

Sending kids off to university is an exciting and challenging time for both students and parents alike.  Dealing with divorce at this stage in your family’s life adds additional challenges.   If you need help sorting through the financial issues around these issues, we may be in the position to help.

27 Mar Women & Household Economics

Many of the women coming to see me are concerned about  their ability to negotiate   their settlement when separating.  They believe they  know very little when it comes to the “family finances”.

In a recent poll conducted by Investors Group, 58% of those women surveyed said they were more involved in household budgeting than their partners while  44% feel more involved than their partner in investment and retirement planning decisions.

Understanding household budgets.. where money is being  spent now  is integral in  understanding the implications of any settlement being considered. It’s not just how much is coming in  by the way of support payments but how much  you spend.  Budgeting is a measurement of lifestyle.  If your goal is to maintain a “similar lifestyle”  after divorce, having a good understanding of what you life cost before and  after divorce is key in good negotiations when dealing with divorce.

Give yourself credit ladies.. you know more than you think you do!!

20 Mar I Owe What in Income Tax?!?

Tax

Tax (Photo credit: Images_of_Money)

If 2011 was the year you signed your separation agreement and Spousal Support  payments were part of your agreement,  you should   get professional help when  filing your taxes  this time around .

The spouse who pays support is entitled to claim the amount of the payments as a deduction against his or her income tax. The receiving spouse is consequently obliged to claim the support he or she has received as taxable income on his or her tax return. If he/she is working, the amount received in spousal support must be added to his/her employment income. The payee will be taxed on his/her total income, including support payments.

To ensure you can make this deduction, your separation agreement, which obliges the payer to make the spousal support payments, must clearly state that the payments are for spousal support. Without this clear statement, the federal Income Tax Act requires the payments to be treated as child support payments, which are not tax deductible. Also, they are they not reportable as taxable income in the hands of the payee (your former spouse and partner).

You need to track these payments on your own.  If you are the receiving  spousal support payments, don’t assume you’ll be getting any official  ”tax slip” like a  T4 or T3 that confirms these payments.

I can calculate your estimated tax payable if your receiving spousal support  payments  or amount of tax deducted if you are paying spousal support.  If you are  receiving support I can provide some strategies for  saving and reducing the tax bill .

You don’t want to have any  surprises come next tax season!