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How I Help Separating/Divorcing Individuals and Couples ...

How I Help Separating/Divorcing Individuals and Couples
The financial ramifications of a divorce can be devastating. However, with proper planning and expert help from professionals specializing in financially equitable divorce settlements, you can increase your chances of arriving at a settlement
that fully addresses your long-term financial needs and your spouse’s too. What's missing in most divorce processes is financial expertise. As a Certified Divorce Financial Analyst™ (CDFA™) I can forecast the long-term effects of the settlement. By using a divorce financial specialist, both partners have a clearer view of their financial futures.

Only then can they approach a settlement that fully addresses the financial needs and capabilities of each. I help clients determine the short-term and long-term financial impact of any proposed divorce settlement. I also provide valuable information on financial issues that are related to the divorce, such as tax consequences, dividing pension plans, continued health care coverage, stock option elections and much more.
As a divorce financial specialist and trained family mediator I take a facilitative role with my mediation clients.

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Money & Property Divorce Survival ebook Document Transcript

  • 1. Money & Property Division a safe harbour for your family Call Toll Free (877) 932-8389
  • 2. Sample Partial Articles For the complete e-book or to learn more about our Mediation Services Visit www.divorcethesmartway.ca to subsribe to the FULL EDITIONS all 6 of the DTSW e-books If you think Divorce the Smartway might be right for you, please call toll free (877) 9328389 today and we will answer your additional questions and book your free 1/2 hour telephone consultation. We have offices throughout the Greater Toronto Area (877) 932-8389 www.divorcethesmartway.ca
  • 3. Your Financial Reality Understanding your financial situation will give you a sense of control over your life Contemplating separation/divorce, most people put themselves under undue stress worrying about their financial well-being. Much of that stress is due to the fear of the unknown. So what do you do about it? Non-retirement investment accounts: Before, during, or after a divorce, it is important to keep yourself in reality as to your financial situation. Doing so will give you a sense of control over your life, which will reduce your stress level. Your financial situation can be broken into four different categories: assets, liabilities, income, and expenses. The following are some tips on how to effectively do that. Real Estate: These include TFSAs, mutual funds, brokerage accounts, annuities, cash-value of life insurance, certificates of deposit, and stocks or bonds held in certificate form. This usually consists of the house and any other property Assets: Assets have a way of disappearing after divorce proceedings start. As soon as divorce becomes a possibility, start by listing what assets you think the two of you own; use the ‘Asset Tracking Worksheet’ in the companion workbook to help with this. That list should include: Cash: Do you keep any at home or in a safe-deposit box? Checking Accounts: The list should include personal, joint, business, or trust accounts. Savings or money-market accounts: Don't forget accounts set up for a "special purpose" such as Christmas club or annual or semiannual expenses. Those accounts are usually funded by payroll deduction and are set up to fund large and infrequent expenses such as the annual premium on the home or auto insurance, Christmas, and so on. These accounts are easy to forget. Retirement accounts: These include RRSPs, defined contribution plans and pension plans (government and private). Don't forget any plans from previous employers that were left behind. Divorce the Smartway Page 2 Total of Contents Your Financial Reality Assets: Cash: Checking Accounts: Savings or money-market accounts: Retirement accounts: Non-retirement investment accounts: Real Estate: Employer-funded incentive programs: Liabilities: Income: Expenses: The 411 on Property Financial Assets: Pension & Retirement Assets: Employee Benefits: Personal Property: Real Estate: Debts: Closely Held Business: Property Settlement Note: Life Insurance: Other Assets: How I Helped One Couple Move Forward to Settlement Know what your marital assets are? What if there's a business or professional practice involved? What about a budget? What about personal property? What about pensions? What about your home? What do you want and why? The bottom line: Remember: 2 2 2 2 2 2 2 11 11 11 11 11 4 4 4 5 5 5 5 6 6 6 6 7 8 8 8 9 9 9 9 9 10 10
  • 4. Ken S. Maynard CDFA - Mediator - Senior Negotiator How I Help Separating/Divorcing Individuals and Couples The financial ramifications of a divorce can be devastating. However, with proper planning and expert help from professionals specializing in financially equitable divorce settlements, you can increase your chances of arriving at a settlement that fully addresses your long-term financial needs and your spouse’s too. What's missing in most divorce processes is financial expertise. As a Certified Divorce Financial Analyst™ (CDFA™) I can forecast the long-term effects of the settlement. By using a divorce financial specialist, both partners have a clearer view of their financial futures. Only then can they approach a settlement that fully addresses the financial needs and capabilities of each. I help clients determine the short-term and long-term financial impact of any proposed divorce settlement. I also provide valuable information on financial issues that are related to the divorce, such as tax consequences, dividing pension plans, continued health care coverage, stock option elections and much more. As a divorce financial specialist and trained family mediator I take a facilitative role with my mediation clients. More About Me I bring a wealth of personal and particle experience to my clients, with more than 25 years of experience as a senior business executive. Leading the Divorce the Smartway team, I am committed to guiding and facilitating couples through Divorce the Smartway’s Family Harbour™ mediation process. This unique step-by-step approach to divorce mediation is a new paradigm, delivering acceptable outcomes for all parties I feel my unparalleled financial, negotiation, business experience, family mediation training and CDFA designation, combined with our own innovative Family Harbour process, can help to save clients money, provide clarity to property division, accelerate timelines, reduce emotional chaos and empower each couple faced with separation/divorce. For mediation, we are right for you if: • You are both committed to moving through your divorce in a strategic, pragmatic, proactive way. • You have assets (complicated or not) you want to preserve and protect. • You want to minimize the impact on your children. • You are amicable or conflicted. • You can, on at least 1 or 2 occasions, sit in the same room with your spouse and myself as mediator. If you think Divorce the Smartway might be right for you, please call today. We will answer your additional questions, and schedule your free 1/2 hour telephone consultation. We have offices throughout the Greater Toronto Area. (877) 932-8389 www.divorcethesmartway.ca Cut Costs | Ease Stress | Save Time | Safeguard the Children Page 3
  • 5. How I Helped One Couple How a I Helped One Couple: ment that would work for both John and Jane. Let's look at an example on how it all fits in. John and Jane are 40 years old and have two children. They own a home worth $365,000 with net equity of $77,500. Their retirement accounts total $165,500 in value. John earns $90,000 a year and has take-home pay of $67,429 a year. Jane has never worked outside the home and has no job skills, but she hopes to get a job eaning $22,500 a year. To improve Jane's financial future, the settlement could provide her with increased spousal support of $471 per month for 10 years. After all, a major consideration for determining spousal support is the need of one spouse and the other's ability to pay. Both numbers are a result of income minus expenses. The following settlement has been suggested. After the divorce, Jane and the children will live in the marital home, which will be deeded to her. She will also receive $44,000 of the retirement money and John will receive $121,500, thus dividing the assets equally. John will pay Jane spousal support of $250 per month for five years and child support of $225 per month per child. He will also pay college costs, which start in four years. John's expenses include his normal living expenses, child support, spousal support, and college costs. Jane's expenses include support for the children and are reduced when each child leaves home. This appears to be a reasonably fair settlement. However, an analysis creates the financial future illustrated in Graph #1 (below). Jane's assets will be completely depleted within seven years while John's investments will grow dramatically. The reason is that, soon after the divorce is final, she will need to tap into her assets to make ends meet. As an experienced Divorce Financial Specialist I anticipated this situation and suggested an alternative settle- The correct child support, according to the Child Support Guidelines in their province, is $1,293 per month for two children for a couple with their income. Jane could also be awarded an additional $24,300 from the retirement plans. She may also need to cut her expenses by 10%. These changes in the original settlement will produce the results illustrated in Graph #2. John will still have a surplus, which he can add to his investments. If John stays within his budget and invests all of his extra income, his investments have the capacity to grow to $2.5 million by the time he is 60. This sample case illustrates the value of preparation and analysis as a means of reaching a more financially equitable divorce settlement. If the separating couple’s intent is to treat both parties in a separation as equitable as possible, it is essential to analyze the marriage as if it were a financial contract, with tangible investment into it by both parties. Without preparation, they wouldn't have been able to make an informed decisions for more spousal support or an uneven split of assets. Cut Costs | Ease Stress | Save Time | Safeguard the Children Page 7
  • 6. Move Forward to Settlement When you're negotiating your divorce settlement, preparation is the key to success. Getting ready to negotiate. During the course of your marriage, you accumulated both assets and liabilities. Although there are regional differences when it comes to who gets what, basically everything purchased, received, or saved during your marriage must be divided when you divorce. So now you're about to sit down and negotiate a financial settlement with your ex but are you truly ready to do so? and objective valuation of the business. The costs of a professional valuation are usually steep, but you can't divide something fairly if you don't know its true worth. Then comes the question of what to do with the business. There are a few options, such as: In a business-owner situation, the business is usually As with any negotiation, preparation, including a thorough understanding of the situation, as well as assistance from professionals to ensure your interests are being expressed is the key to success. Here are a few questions you need to be able to answer before sitting down to negotiate. • • You can't divide the marital assets fairly if you don't know what's there. The disclosure process, which can be informal or formal, is important in every divorce. The informal way is to exchange lists of your assets and debts in an affidavit form. This method should only be used if you are sure that you know everything that exists in your estate. If you're not sure, then a more formal means of discovery should be utilized. What if there's a business or professional practice involved? A business or professional practice tends to complicate a divorce. More often than not, the value of the business becomes a focal point of contention. Couples need to seriously consider getting a professional Divorce the Smartway Sell the business and split the proceeds. • Know what your marital assets are One spouse keeps the business and gives the other a reciprocal dollar value using other assets. Keep ownership in the business at 50/50. most or all of their net worth, so there aren't enough other assets to compensate the other spouse. Even if selling the business is an option (it usually isn't), finding a buyer to pay the right price within an acceptable timeframe is practically impossible. Most divorcing couples don't want to maintain a relationship, not even a business relationship, after the divorce. So what do you do? The only real options are a property settlement note (one spouse buys the other's share in a series of installment payments at a market-interest rate) or a spousal support arrangement to compensate for the difference. Page 8