11 Dec Dividing Property in Divorce

ID-10071842Deciding how to split assets is more than just dividing the values on paper.  People often make the mistake of believing that dividing everything in half is the simplest and fairest way of handling things.  This is not necessarily true.  People need to pay attention to the decisions they make about dividing property and consider the long term consequences.

Assets differ in a number of ways.  Some are liquid like cash.  Some assets like RRSP accounts are tax deferred.  Some assets need to be valued in a specific manner according to family law rules and regulations.  Investments may have a different value after taking into account possible capital gains taxes.

Sometimes assets have an emotional connection that may have more worth than the actual dollar value such as a house, business, or family heirloom.

Assets may have costs to consider.  A couple may have a $400,000 investment  account and a house worth $400,000 (mortgage free).  The assumption is that if one spouse takes the house and the other takes the cash, this results in an equal division.  Keeping the house has costs such as property taxes and upkeep and maintenance. The investment account will be growing over time earning interest. It may not seem quite the equal split over a period of time.

Debts are also part of the division of marital property.  Allocating debts in divorce may mean paying them off, refinancing, or applying for new debt.  Different types of debt carry different fees, charge, penalties and terms.   Just because you have $10,000 left on your car loan and $10,000 credit card debt doesn’t mean that the car loan should go to one spouse while the credit card debt goes to the other.

Divorce settlements are often agreed upon with limited insight into the long-term consequences.  As a result, settlements that seem to be fair and workable initially do not necessarily stand the test of time.  Therefore, it is highly recommended that a divorce financial planner be brought into the process so that you can see how decisions you make today will affect the rest of your life.

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

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

14 Sep Joys of Home Ownership… Or not

 

Elise (not her real name) was happy when she ended up as the sole owner of the family home as a result of her divorce property settlement. But getting the family home in a settlement isn’t always the best thing.

Located in a nice neighborhood, the home was valued at more than half a million dollars. The property had increased 4 fold since she and her ex-husband purchased it some 18 years ago.

Elise needed a mortgage to secure the home, but the monthly payment was well within her budget (or so she thought). She wanted to keep the house to minimize the impact of the divorce on her two kids, avoiding changing schools and uprooting friendships. “There’s no way I’d ever be able to find another home as nice as this one,” she told me.

Less than one year after the divorce, things started falling apart. First, the furnace needed to be replaced — a $900 expense, which she charged to her VISA card. Then, a leaky roof  needed to be replaced — $1,600,  which also went on her credit card. That spring, the fence along one side of her property fell down after a big storm and upon examination, it was discovered that the main posts were rotting so guess what, a unplanned new fence went up  while she was on vacation with the kids. (the fence and the vacation went on her  line of credit ). She wondered what might come next.

Then, toward the end of summer, her washer failed. Because the warranty had expired a year earlier, it made  more sense to buy a new, more energy efficient washer for $1200 than paying the $500 repair bill.

Her debt was piling up. Before she knew it, her credit card and line of credit debt had grown from zero to more than $21,000, all since the divorce.  Small repairs and routine maintenance  expenses never seem to stop  (like hiring someone to do lawn  and snow removal that her husband had done before)

I routinely call Elise to see how she’s doing and she voiced her concerns about the house which was approaching a point where more costly repairs might also become necessary.  I told her she had to consider the possibility she might be best off  selling this house and move to a newer home requiring less maintenance. I recommended she get a home inspection by a licensed home inspector while she considered her options. She knew she couldn’t sell it and get what she wanted for it without first doing some of repairs.  I called two realtors to get independent market appraisals. I requested assessments both with and without the repairs. Both agents agreed the repairs were necessary and would generate a higher selling price that would more than cover her costs. Elise concentrated on the things that most potential buyers focus on (the roof, new paint job and new tiles in the bathroom). The realtor also took her around and showed here what newer homes were available in the neighbourhood. With information provided by the realtor re selling and buying options, I was able to provide Elise with a budget of future housing costs. I showed her how she could pay off all her debt, putting herself in a far more comfortable financial position going forward.

The repairs were completed quickly. The house sold a few weeks after listing it. She and her kids moved to a lovely new home in the same neighbourhood. Elise later told me that moving to a new home was actually a great relief as it represented the fresh start she needed to move beyond the divorce. Having the right numbers and information paid off for her.  A Divorce Financial Professional can help you get the right numbers and information before you sign your settlement agreement which may lead to an even greater pay off for you.

 

Image courtesy of FreeDigitalPhotos.net

04 Jul Boomer Divorce — Divorce Talks July 17th 2012

 

At 50 or 60, the kids may have left and  couples realize they have 30 or more years left to fully engage with, and enjoy life. If they can’t find a way to do it together, they are considering  taking the risk  of leaving the marriage.  If you or someone you know is part of this growing segment  of the “grey divorce” demographic, join us for this session.

Here are some of the  questions  we’ll be discussing :

  •     What are the factors and pressures that are changing the futures of so many?
  •     Do you worry about how dividing your wealth will affect your retirement?
  •     Do you struggle with the question will leaving be worth it?
  •     How can you access what is right for you in a professional confidential manner?
  •     Where do you go to weigh your options and decide?
  •     And should you decide to leave, how do you do it in a cost conscious way?

DATE: Tuesday July 17th, 2012

TIME: 6:30 to 8:00 PM

LOCATION: 79 Shuter St. Suite 200 Toronto

To Register go to: http://www.eventbrite.com/event/3795921704

 

01 Jun Financial Homework in Grey Divorce

When you’re considering divorce in your 50’s,    a big concern is the financial impact for you and your spouse at this stage of your lives.  If you delayed having children, they may be young and child support payments may derail retirement plans/savings. You may still be faced with funding post secondary education. You may be supporting aging parents. One spouse may already be retired.

Part of divorce is dissolving your family’s joint financial relationship. This can’t be done unless you know the total financial picture. All the facts need to be on the table so you can determine how best to separate your finances allowing both of you to make the best choices of how you will move forward on your own.

This means doing some homework in advance.  As a start, you need to find and prepare the following documents:

  • Tax returns from most recent tax years
  • Recent paystubs that show payroll deductions
  • List of personal property  such as cars, boats, valuable art, jewellery, antiques
  • Recent statement from Assets:
    • Bank accounts
    • Investment accounts including open, RRSP, RRIF accounts
    • Education savings Accounts
    • Other assets such as Stock options, other Company awards
    • Company Pension
  • Recent statements of Debts: Mortgage, Line of Credit both personal and joint, Car loans
  • Miscellaneous Info: Life insurance, Medical benefit plans
  • Business Ownership details

Doing your homework takes time.  Documents may be hard to locate. You may have to request copies from the bank or your employer. You may not have looked at some of these documents for a very long time.

You can hire a divorce financial professional to “tutor” you with your homework. They can help explain and organize it all so everyone is ready to start.

15 May Financial stability is top of mind in grey divorce

From Marion Korn’s blog http://marionkorn.com/index.php/financial-stability-is-top-of-mind-in-grey-divorce/

At the time in life when incomes start to shrink and retirement is approaching, divorce costs are likely not in the budget.  A lifetime of planning for the future can be deeply undermined if emotions get the better of good sense.

Divorce among couples in their 50’s and 60’s is on the rise.  Whatever the cause, the effect is that a new strategic financial plan is needed.  Additional living costs will be a certain result.  And postponed retirement may be another.

Luckily there are good options that can control the cost of settling all the details in a “late in life” divorce.  Gone are the days when divorce meant court and the delays and expense that entailed.

Collaborative Practice (also called Collaborative Law) is a popular choice among separating couples who want to work out their futures with respect for one another.  They also recognize that preservation of their assets is key in ensuring that they can both look forward to financial stability.

The collaborative process is about management.  The well trained lawyers manage the negotiations by making sure their clients are well informed and that they have the time they need to fully understand the effect of the choices they make.

The financial outcomes are also managed by the financial professionals who can translate the clients’ thoughts and choices about their futures into numbers that illustrate the realities.

Managing the costs of separation is the first step in re-establishing a plan for the future.

Call Marion Korn at  416-915-7000 for more information about Collaborative Practice and how this approach is well suited for late in life divorce.

05 Oct 40% of Marriages Ending in Divorce…

I was reading an article today by CBC News…

The traditional definition of family is changing in Canada, with 40 per cent of marriages ending in divorce, according to a new study.
For the first time in Canadian history, there are more unmarried people than legally married people age 15 and over in this country, says the study from the Vanier Institute of the Family released Monday in Ottawa. It was based on data from the 2006 census.

The article went on to list… Top 5 reasons couples separate or divorce
1. Different values and interests
2. Abuse — physical and emotional
3. Alcohol and drugs
4. Infidelity
5. Career-related conflict
Source: Vanier Institute of the Family

Interesting that money issues/finances did not make the list of top 5. One could make the case that money/finance has an underlying effect.

The recent economic downturn has proven to be a stressor for families. The higher cost of living means most families now require two income earners to achieve an average standard of living.
More families are also struggling with debt and poverty. Men are also working longer hours and spending less time with their families.

Share your thoughts on today’s “Modern Family”.

24 Aug Silence is Golden…or worth $750M?

This morning as you slipped your coffee and glanced at the headlines in print or on the television… It would be impossible for you NOT to be aware of the Tiger Woods’ divorce drama.

The name Elin will forever become synonymous with $750M (the proof… just Google $750M). Settlement terms of the split have not been revealed and will likely remain under wraps as Elin likely traded her silence for cash. Many reports indicated that Woods forked over $750 million, all just speculation.

“Elin Nordegren ended up with double the sum she originally sought, after her lawyers proved Woods was worth much more than the $1billion she thought… her legal team did a great job digging up all sorts of assets”

Despite everything, Elin and Tiger have reached an amicable settlement avoiding court.

10 Aug Launch of Eva’s RoundTable

Looking for investment advice for your equalization payment… Selling the marital home and looking to downsize… not sure if the kids emerged unscarred post-divorce.
During and after divorce, women need trusted resources to advise on their specific situation, perhaps a mediator, family therapist, realtor, life coach, investment advisor, or mortgage professional.
I have launched EVA’S ROUNDTABLE a directory of professionals who can advise women facing separation/divorce.
Eva’s Roundtable is here to help you connect with professionals that are pre-screened and referred through Women in Divorce Financial. Each one provides a specific area of expertise, and understands the value of working together.

Click here to view Eva’s Roundtable