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

 

15 Oct Divorce Settlement Options

When it comes to the financial aspects of divorce, it not just lack of understanding of the family’s finances, it’s the lack of information about a family’s financial picture that tends to make good financial decisions challenging  for couples when they decide to divorce.

One spouse may  know more because they managed the family investments or were in charge of paying the bills.  After all, the couple may have thought it would be a waste of time for both to balance the check book twice every month so one takes the responsibility and tends to keep doing it throughout the marriage.

Important decisions to be made when negotiating your settlement need high quality information from which to judge the options. The spouse with less knowledge may spend more time collecting documents,  working on past and go forward budgets. This is the most important part of divorce financial planning.   Decisions regarding finances are based on choosing one option relative to another. If you are confronted with a decision you must make based on limited information you risk  reaching a poor conclusion that may  affect you for a long time.   That’s why divorce financial planning before, during and after is critical to  your future when dealing with separation and divorce.

 

Image courtesy of Keerati at FreeDigitalPhotos.net

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

12 Sep Do I have to keep saying no to my kids?

 

One of my clients described how her son was afraid to tell her that he’d outgrown his running shoes. Another said her daughter declined invitations to go to the movies with her friends because she didn’t want to have to ask for movie money. Kids understand the financial changes that occur after divorce.

How can you make ends meet and maintain your family’s lifestyle if your income after divorce is insufficient?

Child support payments are not intended to cover all costs associated with raising a child, and often fall far short. They take into account the cost of food, housing, and clothing. But they do not cover a range of other expenses from after school activities like music lessons or sport lessons to vacations, or cell phones to school supplies. These expenses rise significantly as children get older. Does everyone under the age of 18 really have an I-Phone?

The first thing to do, whether you’re contemplating divorce or are in the process of divorcing, is quantify how much your lifestyle truly costs. As a divorce financial professional, I help clients put together projected budgets. It’s important to account for as many details as possible:  the cost of summer camp, rep hockey, tutoring, a computer the child will need for school in later years.

Then we weigh these financial needs against a couple’s ability to pay. Does the family income cover this budget plus a reasonable amount for the non-custodial parent?  If not, can a division of marital assets help supplement the difference? Can we scale back to a bare-bones budget? Can we distinguish between wants and needs?

In divorce, financial support comes from 4 sources: Employment Income, Child support, Division of marital assets, spousal support. Each of these sources has different tax and financial consequences.  Yet because household spending on adults and children is intertwined, all three can contribute to a child’s financial welfare.

I work with clients to look at the financial and tax implications of proposed child support and spousal support payments along with the proposed division of marital assets.  I use software to project the short and long-term impact of a proposed divorce settlement. These projections can be really powerful.

 

What if you’re already divorced and find that you can’t make ends meet,  a financial planner specializing in divorce can work with you to put together a saving and spending plan and help give you a holistic picture of your finances.

Wouldn’t it be nice to say “yes” to your kids once again?

 

Image courtesy of FreeDigitalPhotos.net

29 Jun Start thinking of “smart spending” when divorcing

If you are divorcing or newly divorced, and trying to figure out how you’ll manage financially, it’s hard to think about your spending along with all the other issues in divorce. However, while you’re working through your settlement, you can start to think about how to save in many ways without feeling like you are “penny pinching”.  Each savings will add up more than you could believe possible.

Did you know that every minute water flows down the drain wastes up to 2.5 gallons? So turn off the water while brushing your teeth or shaving. Only run the dishwasher and washing machine when you have full loads, water plants in the morning when the water is less likely to evaporate.

Drive the speed limit, go easy on the brakes, and carpool when you can. The more moderate your speed, and the less you rev the engine, the less gas you are going to use. This could save you $4 to $40 a month depending on how much you drive.

Almost a third of gift cards go unused. And more get used too late. If you read the fine print on the back of the card, you may be shocked to see that some cards expire as quickly as six months after their purchase. Others charge $1 to $2.50 for dormancy, maintenance, or inactivity fees if they’re not used within 6 to 24 months. Solution: Shop and save the face value of your card!

The average household gets 15 bills a month. At 61 cents a stamp that’s over $100 a year. See if your bank offers free online bill payments.

It may not seem like a lot, but most out-of-network banks charge $1.50 to $3.00 for a bank withdrawal. Would you like to take out money and only get 97 percent of what you asked for? That’s what you get if you take out $100. Plan ahead and go to your bank’s ATM. You could save as much as $30 a year.

The point of insurance is to protect you when something really bad happens, not for small claims. Raise that deductible on your car or homeowner insurance and save $200 to $300 a year.

If you followed all of these tips, you could save hundred a year!

05 Jun Measuring Your Lifestyle

A business metric is any type of measurement used to gauge some quantifiable component of a company’s performance. Business metrics are part of the broad area of business intelligence, which comprises a wide variety of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions. Creating a “metrics” to measure family lifestyle can be a valuable tool when you are separating. It useful information to have and it is usually part of the financial disclosure information required.

A family’s “lifestyle metrics” includes

  • The day to day living expenses incurred during the marriage
  • Spending habits of the individual family members
  • Recurring  expenses by category of expense
  • Unusual , non recurring seasonal expenses

Benefits to you :

  • Information is accurate rather than “best guesses”
  • Provides a reality check for couples of where their money is really going
  • Uncovers any gaps /discrepancies between reported income and non reported income
  • Provides more accurate picture of what is required by each spouse post separation
  •  Starting point for  each spouse to develop their own individual future budgets

Speak to me about the possibility of creating a metrics of your family’s lifestyle.

 

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.

10 Apr Grey Divorce

In 2009, people ages 50 and older were twice as likely to divorce as their counterparts in 1990. Researchers have just begun to explore why. They know that, for many boomer couples, the kids are out of the house and it’s time to face reality. Who gets to keep what is  even more stressful at this age when  you have to consider the financial impact  this will have on the rest  of your life.

If you or someone you know is facing divorce in their 50’s, this is a  reminder that we are hosting “Late in Life” Divorce Talks on Thurs Apr 12th. Join us to hear about the what the financial  effects might be depending on whether you’re the dumper or the dumpee.

To register click here  http://www.eventbrite.com/event/2544127554

05 Apr We don’t want to go to court!!

For  couples contemplating separation or divorce at later stage of life, the costs of   prolonged negotiations that may erode assets that they’ ve set aside for their retirement  is not what they want to see happen. There are viable alternatives to costly litigation  that  allows the couple, rather than the court, to decide what is best for them.

If you or someone you know is facing divorce, join us on Apr 12  at “Late in Life” Divorce Talks.
Learn how our mediation process works and how it differs from litigation.  To register CLICK HERE

03 Apr Grey Divorce

For   “empty – nesters”, divorce is increasingly common. Though overall divorce rates have declined since spiking in the 1980s, there has been a rise in “grey divorce”.

At this stage of your life, you probably didn’t think divorce would be something you’d be contemplating when also having to consider things like investing in your business, funding your retirement, paying for your kid’s weddings or ending your working years.   The issues are significantly different than for someone in their 50’s or older than someone in their 30’s or 40’s.   You are concerned with your financial future.. can I afford to got  it alone ? How will this affect my retirement? What will I have to give up?

If you or someone you know is contemplating divorce at this stage of their lives, join us on Thurs. April 12th  for a discussion about unique issues of the older divorcing population.

Click Here for details and registration