Real Talk: Divorce

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Death.Divorce. Job loss. Sometimes tough stuff happens. Unfortunately, thesenot-so-great milestones often come with a financial impact. So, what do you doif you‘re getting a divorce? Or if a loved one suddenly passes away? Or if youfind yourself with more debt than is comfortable? In our series, Real Talk for the Tough Stuff, we’lltackle some of these situations head-on with the honest financial advice youneed to get through and get on with life. 

Firstup, Real Talk for the Tough Stuff: TheDivorce Edition

Whileit’s challenging to find exact numbers for the divorce rate in Canada, thegenerally agreed upon number is that about 70,000—or around four in tenmarriages—end in divorce each year. Romantics will take heed that six out often marriages don’t end in separation, but for realists, that number means thatmore likely than not either you, a loved one, a colleague, or a friend willexperience divorce at some point. 

Wespoke with Lisa Purchase from Leading Edge Credit Union for some honestfinancial advice on how to get through a divorce with your finances intact.

Firstthings first: sit down, take a deep breath, and have a level-headedconversation with your former partner. Break down your joint debts, balances,payments, and assets and decide what to do, what to keep, what to sell, etc.This is an emotional time, so reaching a mutual agreement might not always bepossible. That’s where a lawyer can help. 

“Ialways tell people, if you can both work with the same lawyer that will saveyou a lot of money—and in some cases, time. Go separately or together, but workwith the same lawyer to draft an agreement together that you’re both happywith,” says Purchase.

Ofcourse, that might not always be possible. It’s not the end of the world if youneed to see separate council, just be aware that extended negotiations can taketime and ultimately money. 

Onceyou’ve determined an action plan, then it’s time to work with a financialexpert to restructure your finances. 

“Wework with our members to find a flexible solution for their finances,” saysPurchase. “Often times getting a divorce means you need to restructure everything—frompayment amounts, to lines of credit, to your household budget—it’s important tomake a plan and stick to it moving forward.”

Ifthere are children involved, be sure to be clear on the financial implicationsfor their care. Things like alimony, child support, and even who pays for whatin terms of clothing and extracurricular activities are all things to discuss and thinkabout with your soon-to-be-ex partner. 

Beyondjust every day finances like chequing and savings accounts, mortgages, andshared debt, there are also a lot of other things to think about in terms ofthe conscious uncoupling of your finances. Do you have a joint life insurancepolicy? What about your will? Who is your emergency contact? Chances are, theseare all things that will need to be updated too.

Butit’s not all bad news.  In some cases,divorce can actually be a much-needed opportunity to take stock of yourfinances and revaluate things. “Maybe you sell some assets and use that profitto pay off some debt. Or maybe you can take this time to think about your cashflow or financial future. A lot of times divorce forces people to take care oftheir finances, and sometimes, even come out ahead,” notes Purchase.

Eventhough your happily ever after may have passed its best before date, it doesn’thave to have a major impact on your finances. Ultimately—like most things inlife—communication and being open and honest with what you want, need, and canafford, will be key in getting through this chapter and on to the next.