Divorce Planning
Going through a separation or divorce is not easy, and it may feel like it is bringing you down emotionally and financially. Although it might feel difficult, planning ahead for the future while going through a separation or divorce is very important. In this financial blog, I will discuss some tips and tricks on what you may want to consider if you find yourself in a separation or divorce situation.
Regardless of the terms of your divorce or separation, when it comes to finances, you want to first and foremost protect yourself. Remove your ex-spouse from your credit cards, and cancel joint cards if you have them. As for joint bank accounts, you may decide to either keep them open or close them. Keeping them open may make sense to facilitate ongoing payments for bills and mortgage payments if those payments are in joint names. But perhaps only deposit enough to fund those bills and nothing else. Also, make sure you change your PIN on your debit and credit cards if your ex-spouse knows it. This goes for changing the passwords on websites as well. And most importantly, seek professional help, talk to a lawyer and a Chartered Financial Divorce Specialist.
Once you have legal representation, you will want to put together a list of your legal and financial information. This includes bank and investment statements, pensions, titles to property, insurance policies and credit information. Be sure to note whether the assets are jointly held or in whose name they are. You may also want to update your beneficiaries on your investment accounts, life insurance and in your will. Keep in mind that if you name minor children as beneficiaries, you would need to name a trustee who would manage the funds for them. If you have your ex-spouse designated as power of attorney, you may want to name someone else.
With regards to life insurance policies, I certainly wouldn’t go cancelling them immediately after a separation. Depending on the situation, you may be required to hold life insurance to cover things like child support or spousal support payments should you pass away. And if you had an insurance policy while you were married, there is a good chance you still need one, so seek out professional help and get a full insurance review as your needs have likely changed. You may need more, less or possibly the same insurance you had before.
Going through a divorce or separation can be tough. I like to remind people to think of the future when making financial decisions. Too often people just want the divorce or separation over with and forget to see how a decision on division of assets may significantly impact their financial future. Some times we see a situation where one spouse wanted to keep the house, while the other spouse takes the RRSPs or pension. It’s important to thoroughly review your financial situation before making such a decision. Can you afford the house on your own? Does it make financial sense to keep it?
Lastly, remember that you were once married to each other, and if you had children together, you will continue to be in each other’s lives forever.
Celeste Yuzdepski, Wealth Advisor, B. Comm, CFP®, CIM®, CFDS, FCSI®
Information in this article is from sources believed to be reliable, however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views are those of the author, Todd Yuzdepski, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member - Canadian Investor Protection Fund.
