Your Divorce Roadmap
When one person leaves a relationship, whether the other person wants it to end or not, you are separated, You do not need to take any further action to make it “legal”.
You do not have to live in different homes to be considered “separated” as long as each person leads an independent life as if single and is no longer performing the functions normally expected of a married couple such as eating and socializing together. This includes having separate bedrooms and not having sexual relations.
Eventually, once you have separated from your partner, there are several issues you will need to work out. These include:
- How do we value and distribute our property, assets & debts? (your legal divorce)
- How will we support our children and manage our budgets going forward? Is spousal support applicable? (your financial divorce)
- How will we parent our children? (your kid’s divorce)
- How will we minimize the negative emotional impact and uncouple respectfully? (your emotional divorce)
- How do we move on without the bitter taste of animosity? (Rebuilding your life)
Managing your divorce means paying attention to all the aspects of your divorce. But this passage is often fraught with fear, loneliness and confusion. Trying to learn to adjust on your own can be frustrating and overwhelming. You can find yourself hopelessly ‘stuck’ or unsure about which way to turn and more importantly, you can’t make your best decisions, have reasonable discussions or negotiate agreements when emotions are running high.
To take control of your life and make sound decisions, you need to know the facts and understand them. You have to know what’s important and what you want.
Divorce Coaching helps you do that.
You can bounce ideas off your coach and together you can explore the alternatives when you are stuck on a particular problem. You can take the time to think things over and understand the advantages and disadvantages of your different choices. Your coach provides good sound information and feedback so you can stay in control of your decisions.
When you can effectively managing the emotional aspect of divorce you will:
- gain a clearer perspective on your legal options early on
- make better informed decisions which in turn protects you from the damage that uncontrolled emotion causes
- prioritize your actions set goals for your immediate future and beyond
- you are better able to look after your children’s best interests
- negotiate a more mutually satisfactory agreement
- save time and money
- move on with your life as a successful single
You – and your children, if you have any – are going to be living the rest of your lives with the decisions you make during the divorce process.
How do you have a smart divorce that will allow all of you to live without regrets?
Smart Divorce is about...
- A financial settlement that includes a fair and equitable distribution of property, assets & debts as well as budgeting, and support issues.
- A co-parenting schedule that protects your children’s best interests.
- A well negotiated agreement that clearly spells out the terms of your settlement.
- Maintaining your dignity throughout the process so that the decisions you make will allow all of you to live without regret; severing ties to your “ex” and moving on without the bitter taste of animosity.
Often couples are able to resolve many of these issues between themselves or with the assistance of divorce professionals without going to court.
In some cases, though, families need lawyers or a judge to decide things for them. But it is important to remember that going to court can be expensive and time-consuming.
The court process also tends to increase conflict between the couple which doesn’t help families maintain healthy relationships - especially important if there are children involved.
Will I survive financially? Should I keep the house?
What do I have left after paying support?
How will my lifestyle be impacted?
How can I still plan for my future? How will the kids be taken care of?
Uncoupling is a life-changing event and these are just a few of the many financial uncertainties that can arise during separation and divorce. In a time of chaos, it is often difficult just coping with the day-to-day issues. How are you supposed to sort through all your household assets and debts, let alone understand and divide a complicated investment portfolio while riding on a wild emotional roller coaster?
Nonetheless, important financial decisions must be made - decisions that will impact the rest of your life. If you want to manage your divorce well, you will need to be actively involved and:
- set realistic financial goals to minimize stress and conflict
- get your financial information organized to reduce billable hours and save money.
- plan for the future in order to have peace of mind.
Financial divorce is about what you own and what you are going to live on in the future – your assets, debts, investments, cash flow, budgeting and taxes. Having a clear understanding of your financial picture helps you to establish realistic expectations early on in the process.
Make an inventory
- What assets do you own? (real estate, vehicles, bank accounts, pensions, stocks/bonds, RRSPs, own business, etc.)
- What bills do you owe? (credit cards, line of credit)
- What income can you count on?
Your net worth is the amount by which your assets exceed your liabilities. Whatever your assets, they need to be put "on the table" for valuation and division.
Create a realistic monthly budget
How do you spend your money and what are your expenses?
Given that it is likely that your household income is going to be reduced, you may have to change some old habits. There may also be additional expenses you now have to carry alone such as health insurance, home and car insurance.
Trying to support two households after divorce on the same income is a common source of divorce friction and conflict. Many people believe they should be entitled to maintain the same lifestyle they had before. You can’t.
In addition, it is not uncommon that one partner was more responsible for managing the finances. If you were not involved before, now’s the time to get acquainted with the basics.
‘Matrimonial Property’ is all property you have acquired individually or jointly during your marriage. Generally, when a marriage ends, it is divided equally between you unless the result would be unfair.
Certain kinds of property acquired before the marriage are ‘exempt’ and are not divided when a marriage ends. However, the increase in value of exempt property may be considered matrimonial property but this increase in value may not automatically lead to an equal split.
Property which may be divided includes, but is not limited to:
- the marital home, household goods, money, personal investments, business interests; R.R.S.P. and employment pensions; automobiles and recreational vehicles.
- marital debts or financial obligations incurred by either spouse such as mortgages, car loans, credit card bills, lines of credit, etc.
Property which may not be divided includes:
- property acquired by one spouse before the marriage;
- property one spouse received as a gift;
- property one spouse received by inheritance;
- an award or settlement for damages in tort law in favour of one spouse (i.e. money paid for pain and suffering in an automobile accident) unless the award was meant to compensate both spouses.
Not all assets can be equally compared in terms of dollars and cents. Not only do tax and liquidity issues need to be considered, how do you divide a lifetime of memories and history together?
Distribution of assets is often a very complicated component of divorce and often requires a financial expert or lawyer.
Division of Pensions
Pensions are considered property and include private pensions (by employment) and the Canada Pension Plan. Calculating division upon marital breakdown can be confusing and complicated. Certain pensions may have legislation that determines how the pension will be divided when a marriage ends. You will need to contact your pension administrator to find out if this kind of legislation applies to you.
Plans covered by the Public Sector Pension Plans Act (PSPPA) include the Local Authorities Pension Plan, the Public Service Pension Plan, the Management Employees Pension Plan, the Supplementary Retirement Plan (SRP) for Public Service Managers, the Special Forces Pension Plan and the Public Service Management (Closed Membership) Pension Plan.
To initiate division and distribution, a matrimonial property order (MPO) must be filed with the plan administrator. As persons in common-law relationships are not covered under Alberta's Matrimonial Property Act, they are not eligible for a division and distribution of pension benefits on relationship breakdown.
To learn more check out the following links:
Canadian Pension Plan (CPP)
Regardless of whether you were married or in a common-law relationship, when a relationship ends, either partner may apply for a division of unadjusted pensionable earnings under the Canada Pension Plan. You must have lived together for 12 consecutive months. It is not necessary for the person applying for the division to have contributed directly to the plan to be entitled to a division of the unadjusted earnings of his or her spouse. Division of the Canada Pension Plan is automatic unless both spouses agree otherwise. This is to provide some financial protection to a spouse who did not work outside of the home and/or could not reasonably have contributed to the plan. It is important to remember that taking money out of CPP can have significant tax implications.
A division of pension credits may mean more money to you when you retire or if you become disabled. It could mean benefits for your children if you die or become disabled.
For information on credit splitting of CPP credits you can view/print the Canada Pension Plan Credit Split Kit available from the federal government online at http://www.servicecanada.gc.ca/eng/isp/pub/factsheets/credit.shtml
Both parents have an ongoing financial responsibility to support their kids. The Federal Support guidelines establish a standard of support for children based on province or territory, gross income, number of children and the parenting arrangement.
To help you calculate support payments, check out the Federal Child Support Guidelines.
The guidelines define the basic amount of support to raise a child. Additional expenses may be added on to the basic amount to cover items such as: child-care extra-curricular activities, summer camps, educational programs, medical and dental insurance premiums to cover the children, special health care needs over and above what is covered by regular insurance, post-secondary education.
Calculating spousal support is a very complex issue and often requires the assistance of a lawyer to help determine if support is deemed appropriate in your circumstances. Generally, it is intended to:
- take into account the contributions to the marriage
- ensure that one spouse doesn’t suffer undue economic disadvantage
- assist each spouse in becoming financially independent
The Federal Advisory Guidelines and sets out an upper and lower limit for amount and range of years that support will be paid for. The formulas work with the total amount of money collectively available to a couple and are calculated differently depending on whether child support is paid.
When no child support is paid, the length of the marriage is central in determining both the amount of support payable and the duration for which support must be paid: the longer the relationship, the more support is paid for longer. The parties' gross incomes are used to determine spousal support.
Where child support is paid, the amount of support payable will be calculated taking into consideration the payment of child support and the different tax rules relating to spousal support and child support. The parties' net incomes are be used to determine spousal support.
Check with your financial divorce expert or lawyer as to which payment option will result in the most favourable tax treatment for you. Some options are:
- a settlement with a large lump sum up front
- a few years of ongoing payments
- a lifetime annuity
It's your future and it's out there. It's not what life deals you that will determine how you feel, it is how you think and act to what life deals you. Everything you do, say or think has an outcome or consequence.
Conscious choice is powerful
Escape Financial Ruin
Sure, you would like to give the children the stability and continuity of staying in the family home. And of course, there is some sense of comfort and physical security but realistically; would you really be financially better off selling the "money pit" and starting afresh?
OK, so you’ve gotten an equal “dollar value” for the family home but can you afford the burden of property taxes and repairs? And what if your partner got that same dollar value in the form of a pension fund, a nice asset that is growing in value, tax-deferred? Are these really equal assets even though their dollar value was similar at the time of divorce?
Are you trying to seek revenge and make your spouse “pay” for the hurt and perceived injustices done?
Are you squabbling over petty stuff that you would be better off settling between yourselves?
Distributing your assets and dividing up your life to reach a “fair” settlement are often the heart of conflict in divorce but your financial divorce is business and emotions and business don't mix well.
Pick your battles wisely. Do you really want to pay your lawyer more money than what the item you are fighting about is worth? And the Court has no interest in wasting valuable time trying to decide how to allocate your personal and household possessions.
Your divorce doesn't have to be a financial disaster. It will be a considerably cheaper and faster if you can resolve your differences about your personal and household assets yourself.
Common Financial Errors
- Bad judgment - settling for a quick split without understanding what you are dividing or the financial consequences of your decisions
- Hiding money or assets
- “Revenge” spending
- Keeping the matrimonial home when you really can’t afford it
- Believing that a similar dollar value for dissimilar assets means “fair”
- Not following through on spousal or child support payments
- Making investments or major purchases in anticipation of what you’ll get
- Trying to punish a spouse through financial means
- Are your emotions interfering with your ability to make sound decisions?
The Divorce Coach helps you to stay grounded and negotiate with a cool head.
How well your children adjust to your separation and divorce is a barometer of how well you are adjusting.
Conflict is normal before and during divorce, but if you want to protect your kids, take care of yourself and put the conflict behind you as quickly as possible. Whether you like your former partner or not is irrelevant.
Being a “bad” wife or a “bad” husband does not make your spouse a “bad” parent. Your children still need their relationship with both parents.
It’s your divorce – not your kids
Divorce may change your family structure; you may have remodelled and downsized, but your child still has a family – it’s now a family with two homes and you will be a parent for the rest of your life.
Research shows that children suffer more damage from the conflict between parents and the “pain games’ that put kids in impossible loyalty binds.
The greatest psychological damage and stress for children results from feeling like they are responsible for the breakup of the marriage and feeling that loving one parent is a betrayal of the other.
Raising kids can be challenging at the best of times and when parents live in separate houses, the challenges become even more complicated. And in almost all cases, preserving a healthy and ongoing relationship between both parents is of the highest priority.
Protecting the Kids
To avoid unnecessary conflict and to ensure meaningful contact is maintained, you will need to create a parenting plan – a detailed schedule that clearly defines how each parent will continue to care for the children.
A detailed parenting plan creates stability and security
GOALS OF THE PARENTING PLAN:
- to encourage a relationship with each parent
- to protect the children from parental conflict
- to provide a comprehensive schedule of parenting time with the children
- to consider the child’s developmental needs
- to clarify each parent’s responsibilities
Important Factors to Consider When Developing Your Parenting Plan
- your child’s age, temperament, maturity
- the child’s strength of attachment to each parent
- any special needs of the child and parents
- the child’s relationship with siblings and friends
- the distance between the two households
- the flexibility of both parents’ work schedules
- childcare arrangements
- transportation needs
- ability of the parents to communicate and cooperate
- the family’s cultural and religious practices
- a parent’s ability and willingness to learn basic care-giving skills such as feeding, changing and bathing a young child, preparing a child for day care or school and taking responsibility for helping a child with homework
*** Special Circumstances to consider***
- Child abuse/neglect
- Serious mental or emotional disorders
- Substance abuse or criminal activity
- Domestic violence
- Continuous levels of intense conflict
The Divorce Coach has taught the mandatory Parenting After Separation Seminar and will work with you to create an effective parenting plan based on your child’s needs and stage of development.
Children Benefit When Parents….
- keep the other parent informed of all child-related activities and issues
- maintain predictable schedules
- ensure smooth transitions and have the children ready at exchange time
- avoid conflict in front of the kids
- reassure the children you support their relationship with the other parent
- provide their own space and belongings in your home
- allow them to carry important toys, etc. between homes
- follow similar routines for meals and bedtime, homework
- handle rules and discipline in similar ways
- support contact with extended family (grandparents, etc.)
- are flexible so the child can participate in special family events
- establish a workable, “business-like” communication
- plan vacations around the child’s regular activities
Children Are Harmed When Parents…
- argue or put down the other parent in front of the child
- try to “win” the child over to their side or use the child as an ally
- engage in one-upmanship
- use the child to pass messages to the other parent
- question the child about the other parent’s activities or relationships
- make promises they do not keep
- engage in a power struggle with the other parent
- discuss their personal problems with the child or within the child’s hearing
- don’t keep the other parent informed
- threaten or engage in ugly court battles
Tips for Divorcing Parents
Here are some ways parents can ease the impact of their break-up on their children:
- Focus on your former spouse’s strengths as a parent. Children know they are "part mom" and “part dad," so when you put the other parent down in front of them, the criticism can harm the child’s self-esteem.
- If you have something to say to the other parent say it them directly. Protecting the children from your battles lets them adjust more quickly.
- Many children assume that they are to blame for the breakup or their parents’ hostility. Reassure your children often that they are loved and that the divorce is not their fault.
- Accept that moms and dads do indeed parenting differently. That’s OK. Exposure to different values and strengths help children develop into well-adjusted responsible individuals.
- Understand that your needs are different from your child’s needs. Take care of yourself so that you are available to focus on providing what your child needs to adapt more quickly to the newly restructured family unit.
- If you are struggling emotionally, your children may be tempted to act as your caretaker. Let your kids be kids. Use your peers and adult family members as a sounding board and work with a coach to navigate the emotional divorce.
- If you have a drinking or drug problem, get counseling immediately. Not being at your best, impairs your ability to reassure your children and give them the structure and stability they need at this difficult time.
- If at all possible, avoid making any drastic changes to soon. do not uproot Providing your children with much needed stability in their residence and school life helps cushion children from the trauma of their parents’ divorce.
SUMMARY OF COMMON ISSUES
- living arrangements – who lives where?
- managing assets & debts
- division of household goods & property
- child support
- spousal support
- children’s expenses (activities, medical/dental, daycare, other)
- post-secondary education costs
- weekly time sharing schedule
- holidays and special days
- school breaks
- telephone access
- transportation (drop-offs and pick-ups)
- major decision making (education, religion, activities, health, etc.)
- communicating/sharing information
- How do I file – separate or joint?
- What about the tax refund?
- Who pays what’s owing?
Retirement / Pension Plans
DIVORCE PLANNING CHECKLIST
Documents needed and issues to consider
- Any domestic contracts, marriage contracts or cohabitation agreements entered into by either spouse, at any time preceding or during your marriage or relationship
- Copies of tax returns for the current and three previous tax years, including all attachments and notices of assessment and reassessment.
- Year-to-date pay stubs showing income and deductions
- Benefits booklets from your employers
- Pension information such as your most recent statement
- Bank statements for the three previous years
- Any other bills, receipts, statements or supporting documentation for other individual or shared assets
Property tax and utility statements
- Property assessment of the matrimonial home
- Stock, mutual fund, GIC, RSP, RESP, and other investment statements for individual and jointly held accounts
- Life insurance, disability insurance, and critical illness insurance policies, whether group or individual.
- Information on any business interests such as shareholder’s agreements, dividend statements, corporate financial statements and rental income statements
- Mortgage or rental information for all properties.
- Particulars for all outstanding bank loans, private loan, and other debts (credit cards), including all information regarding pre-payment penalties, if applicable.
Particulars of any and all real estate holdings other than the matrimonial home
- Will updating and power of attorney
- Children’s trust information
- CPP splitting
- Child/spousal support payments
It is a good idea to learn more about family law issues and your options. Explore some or all of these options to decide how you should proceed depending on your situation:
Check out these helpful Justice Canada publications at www.justice.gc.ca
■ What Happens Next? Information for Kids About Separation and Divorce
■ The Federal Child Support Guidelines: Step-by-Step
■ Divorce Law: Questions and Answers
The Alberta Law Line www.albertalawline.ab.ca
Family Justice Services www.justice.gov.ab
Alberta Courts www.albertacourts.ab.ca
Alberta Family Mediation Society www.afms.ca
Legal Education Society of Alberta www.lesa.org
Family Violence Prevention www.child.gov.ab.ca
People often become what they believe themselves to be. When I believe I cannot do something, it makes me incapable of doing it. When I believe I can, I acquire the ability to do it even if I didn’t have it in the beginning.