Divorce and Separation… pause for clarity

Dealing with Divorce can be emotionally draining,  it's important to have clarity before you agree to fixed decisions. Knowing what is and isn't possible can't de-escalate high emotions and secure you for the future with practical knowledge. 

please note this is not legal advice, any information I provide here is for clarity on what financial options are available. It is advised that you first seek legal counsel and/ or mediation to guide you on your legal rights and responsibilities. 

Achieving financial clarity during a divorce or separation involves a systematic process of gathering information, seeking professional advice, and establishing independent financial stability. Proactive planning helps reduce emotional decisions and secure your financial future. 

Key Steps to Gain Financial Clarity

1. Gather All Financial Documents
   The first step is to get a complete picture of your marital finances. Collect and make copies of all relevant documents:
   • Bank statements (checking, savings, joint)
   • Credit card statements and loan documents (mortgage, auto, personal)
   • Tax returns (at least the last three years)
   • Pay stubs and income sources
   • Investment and retirement account statements (401(k)s, RRSPs, pensions, TFSAs, etc.)
   • Insurance policies (life, health, home, auto) and beneficiary designations
   • Property deeds and business valuations
2. Understand Your Net Worth and Budget
   Create a detailed list of all assets (what you own) and liabilities (what you owe). Subtract liabilities from assets to determine your current net worth. This helps form the basis for division of property negotiations.
   • Create a new budget based on a single-income household to understand your new financial reality and anticipate future expenses, such as new housing costs, utilities, food, and childcare.
3. Establish Financial Independence
   • Open individual accounts: Open personal checking, savings, and credit card accounts in your name only.
   • Build individual credit: If most of your credit history is tied to joint accounts, use your new personal credit card for small purchases and pay them off monthly to build an independent credit profile.
   • Monitor joint accounts: Until a formal separation agreement is in place, monitor joint accounts closely. Consider freezing accounts or requiring dual signatures for large withdrawals to prevent the other party from draining funds.
4. Seek Professional Guidance
   Divorce is legally and financially complex. A team of professionals provides objective advice and ensures your interests are protected:
   • Family lawyer: Essential for understanding your rights, obligations, and navigating the legal process.
   • Financial advisor/licensed Mortgage agent Helps you assess long-term financial impacts, tax implications, and develop a post-divorce financial plan.
   • Accountant or tax expert: Helps navigate the tax consequences of asset transfers, spousal support, and changes in filing status.
   • Therapist or counselor: Provides emotional support and helps prevent emotion-based financial decisions.
5. Update Legal and Financial Documents
   Once a separation agreement is finalized, update all relevant documents:
   • Revise your will and estate plan.
   • Change beneficiaries on life insurance policies, pensions, and investment accounts.
   • Update powers of attorney for financial and medical decisions. 

By taking these steps, you can move from anxiety to agency, ensuring a more stable and resilient financial future. If you are dealing with divorce or separation and would like my clarity check list, please message me directly.